The Stock Market Is Not Physics

Action and Reaction In the world of physics, action is followed by reaction. Most financial analysts, economists, historians, sociologists and futurists believe that society works the same way. They typically say, “Because so-and-so has happened, such-and-such will follow.” The news headlines in Figure 1, for example, reflect what economists tell…

The following series is excerpted from two classic issues of Robert Prechter’s Elliott Wave Theorist, originally published in 2004. Cause and Effect In the 1990s, a university professor sold many books that made a case for buying “stocks for the long run.” Then, in an issue of USA Today, he…

The following series is excerpted from two classic issues of Robert Prechter’s Elliott Wave Theorist, originally published in 2004. The Problem of Rationalization and Made Up Financial News Almost every day brings another example of rationalization in defense of the idea that news moves markets. The stock market rallied for…