Wednesday, Dec. 31, 2008

The Myth of the Rational Market

For decades, the accepted academic response to concerns that the economy might be on an unsustainable trajectory was that financial markets knew best. Got a backup? Markets are spectacularly efficient processors of information and opinion. But they also have a tendency (by now well documented) to overshoot on both the upside and the downside.

See pictures of the top 10 scared traders.