This series of articles was authored to point out some of the often hidden, unrecognized, ignored, or forgotten assumptions underlying the functioning of markets in capitalism. Additionally, ways in which markets fail in their intended purpose also feature prominently.
Markets frequently fail, despite their pristine reputation among capitalists. One way is the many actions taken by buyers and sellers to tilt a transaction in their favor. These visible hands create asymmetries between the parties. Jason Voss, CFA, explains.
Markets are usually not systemic. Instead, from the bird’s-eye perspective of "Capitalism," many businesses are "opportunities" in the same way that it feels good to hit yourself in the head with a hammer: It's much better once you stop.
Markets are useful but imperfect, says Jason Voss, CFA. One imperfection is that they assume fungibility. Assuming that a dollar spent on one thing is equivalent to a dollar spent on something else has serious consequences for investors.
Markets assume a context entirely out of view of their participants, which can have deleterious effects for both suppliers and demanders, Jason Voss, CFA, observes in the latest installment of his Where Markets Fail series.
Markets are useful, but imperfect, Jason Voss, CFA, explains in the first installment of his Where Markets Fail series. One glaring flaw is their inability to discount the future. This results in many deleterious and often long-term consequences.
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US Energy Secretary Rick Perry says he will resign by year-end. Perry says in a letter to President Donald Trump that the US is close to energy independence, but the letter does not mention scrutiny of Perry's role in the Ukraine controversy. The Associated Press (17 Oct.)
As the European Securities and Markets Authority awaits comments as part of a consultation on the Market Abuse Regulation, regulators and market participants are expressing divergent views on which issues need attention. Regulators are focused on insider lists and proper handling of insider information, but financial firms are concerned about compliance when making recommendations to clients and when having discussions with investors before a deal is announced. Practice Insight (17 Oct.)
The US House has voted 229-186 to pass a bill that would require the Securities and Exchange Commission to test disclosures it adopts to determine whether they give retail investors necessary information. The bill's sponsor, Rep. Sean Casten, says the measure "ensures that brokers would share information in a way that allows you to make the best investment decision for you and your family." ThinkAdvisor (free registration) (17 Oct.)
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