Gobsmacked
by digby
Krugman blogged something today that just blows my mind:
From the FT: stock in Berkshire Hathaway, Warren Buffet’s company, jumps every time Anne Hathaway, the actress, gets a lot of media play. Why? The claim is that it’s the fault of robotrading algorithms, which now account for most of the market, and which sometimes rely among other things on trends in news coverage.
Really? Am I the only one who is astonished that Market Gods are robots that can’t tell the difference between Ann Hathaway and Berkshire Hathaway and obviously just buy and sell on “buzz” whether it’s good or bad? That’s not even remotely rational.
Obviously, this may only account for a small piece of the market, but it’s fairly disturbing anyway. Well, it’s disturbing if you think that the markets are supposed to have some bearing on real value. If it’s just another betting game and everyone’s playing by the same rules, then what difference does it make?
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