Market Watch linked to a story about the sharp fall in the price of gold, silver, and other commodities. One 'analyst' stated that metals had 'risen beyond the scope of their fundamentals' implicitly suggesting that after the fact it was obvious that prices were too high. Well…….
Gee everything is obvious after the fact. Is the analyst saying that the buyers of gold over $1,000 knew it was a bad deal, apparently not, no one forced them into the trade. Gee, UBS stock has melted down in their lemming like run to sub prime mortgages. Ironically UBS now wants to get out of the sub prime business and return to 'wealth management.' Would you trust those guys to manage your wealth, they just tanked their own stock price with a greater than 2/3 decline in a few months.
MY point is that prices in markets are up and down. Fundamental analysis would have you believe that there is an equilibrium price as which stocks or bonds or whatever should trade. But gee they never stay at any price for long do they? We will be examining the technical aspect of analysis this semester in the Statement Analysis class, what do prices and the market itself tell us about how over or underpriced an instrument might be?
What determines this volatility? One view is that popular culture, the collective feeling of the crowd does this. Today's pop singer will be tomorrow's golden oldie, fashions, stocks and investing in stocks at all wanes and waxes with the popular mood, This social science is referred to as socionomics.
Professor Elam 
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