Term of the Day: Price Discovery


With the prospect of quantitative easing ending later this month I feel like it could be that time to sit little johnny down and remind him of that thing we used to call price discovery. This is where members of the investment community, both buyers and sellers, come together to discover the price of an asset.

Of late, this mechanism has been impaired by the intervention of central bankers in capital markets akin to a mechanic trying to fix my vehicle's engine through the application of a new paint job and topping up the fluids. Somehow, their efforts have failed, but not without cost.

When I gaze upon the market these days, unfortunately, I do not see a lot of organic growth. There are quite a few reasons to buy, but more reasons to sell - or wait, at least. Perhaps, I have mistaken a great many share buybacks, dividend increases, job slashing, restructuring/inversions, creative accounting, mergers/acquisitions, and company right-sizing - for global growth. Oh, fair enough, one can't catch 'em all.


If quantitative easing shall live disregard this note and play Strawberry Fields Forever. If not, queue Mozart's Requiem Mass in D minor, or other suitable music for the festivities.


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