PERSPECTIVES

The human search for reasons

The (very human) search for reasons

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In a great post Stephen Dubner once wondered aloud why stock markets rise and fall. His point – that every day, observers look to ascribe a cause to what happened over the small window of time that is a trading day. As Dubner points out, newspapers (and the media generally) look to pin a cause on what they’re seeing which may in fact bear little resemblance to the actual forces at play.

Markets have to find volatility

We’ve been brought up to look for reasons for things; to find a rational reason why things happen. But often, our viewpoint for that reference is so narrow and so defined that in fact the logic is flawed, deceptive even. That however is far less scary than admitting we have no reason for knowing why a stock, market, group of consumers did what they did today or yesterday or 13 days ago. Because that puts us at the mercy of whim, instinct, impulse and group-behaviour.

Markets have to find volatility, otherwise they couldn’t function as efficient trading platforms. And people have to find reasons to explain that volatility in order to give those markets, and themselves, some (false?) sense of control.

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