Prest: Bias behind market’s overreaction to NDP victory

An op-edified version of my last blog post is in the Ottawa Citizen.

Ottawa Citizen

The Glorious New Albertastani revolution continues apace. The buildings are still standing, but markets are apparently nervous. Headline after headline notes the fear gripping the petroleum industry about what this “leftist” government will do.

One analyst described the situation to Bloomberg using phrases like “completely devastating” and “extremely dangerous.” Executives and analysts dropped the dreaded u-word — uncertainty — and oil prices rose slightly even as oil sands producers’ stocks fell somewhat as the market digested the news. Whether they processed it correctly is another matter, of course.

At base, all a market does is aggregate the perceptions of a self-selected set of moneyed actors, which in turn are based on the information available combined with their own intellectual biases. Right now, it’s collecting almost all bias, and precious little information.

Indeed, the market actors — and much more so the market analysts using such apocalyptic language —…

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