September 17, 2019

What Moves The Markets?

The economy has disrupted traditional economics and is fueling the need to change business strategies and methods. Most importantly the foundation of how we view markets must change.

Advanced technologies are adding fuel and subsequently the fire of market movements. The market created and moderated by innovation.

However even if we understand “how” not understanding “why” does not help put current market conditions into context.

If markets are moving we need to understand why, what and how they are moving.  We can be behind, follow or ahead of the market. The choice is ours.

So Why Do Markets Move?

Markets are influenced by opinions. Opinions are formed by the moment and represented by the collective data. Today everyone has been empowered by the web to express their opinion about anything and anyone. Google’s real time search now displays opinions in real time based on whatever topical or person search criteria we seek from the “universal library”.  Good, bad and indifferent opinions used to influence us via old media models and limited channel distribution. Today that model has been disrupted by the empowered masses whose opinion now influences markets more than the markets influence the masses. Today the influence over markets is faster than ever.

Omar Hague writes: Why Controversy Won’t Power Next-Gen News” One of the new competencies the news media is going to have manage is opinion arbitrage. In an era of media production devolved to the masses, everyone can finally express their opinion. So publishers will have to learn to, to put it crudely, buy opinion low and sell it high.

“To play the opinion arbitrage game, news publishers have to stop seeking simply the most controversial opinions. They’re abundant: every talking head can churn one out, and faux “news” of every kind is already chock full of ’em shrieking at one another. Instead, successful opinion arbitrageurs must seek the most informed opinions, gooey with expertise, thick with real value for readers.

“Those opinions are worth the most — and they’re what readers will pay for.

“Controversy, in contrast, is worth a great deal only in terms of low-value readers. Your average radical libertarian Ayn Rand-worshipping global warming denialist isn’t exactly a high-value reader — just like your average patchouli-sniffing communistic hippie isn’t, either. Both are unlikely to pay for new information, because both think they know it all already.It’s the market in the middle that’s worth the most; they have the highest propensity to consume new stuff: “new”s.

“Opinion arbitrage is really the game of setting the terms of a better, more meaningful debate — one that imparts readers with deep, enduring knowledge. That’s what the Financial Times and the Economist, among a select group of others, have excelled at — and it’s what’s powering them to the top of a moribund industry.”

Knowledge Fueled By New Technologies Will Create New Markets and Move Old Ones

AI and Big Data is fueling meaningful topical debate among peers. These debates impart new knowledge and learning initiated by the crowds. You can see the intent of these conversations are relevant to learning how, what, where, when and why people seek information which leads to new knowledge. The flow and organization of information is becoming more powerful on a daily basis.

Artificial Intelligence and Big Data are examples of how information is being aggregated and automated into intentional context which makes finding information more relevant to the market. Vetting the data and subsequently the information is still a time consuming task but technology will advance and enable us to find new knowledge in less time. As Omar suggests, content in context is what provides people and organizations with deep, enduring knowledge that is relevant and relative to advancements that create new markets and transform old ones.

Why do markets move? They move because people use knowledge and new technologies to create new markets and transform old ones.