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Crazy Vs. Crazy: Are Things Really More “Uncertain” In Europe Than They Are In The US?

How can a market "take into consideration all potential future events"? Obviously it can't. That's absurd. That said, stocks should be expected to discount what we might call "known unknowns." That is, events that we know are likely to cause turbulence but that also admit of some indeterminacy regarding outcomes. Things that would fall into that category include the French elections and US tax reform.

Ok, so what have we learned lately? Well, it seems like we've learned that stocks are really sh*tty at their job if equities' job is to act as a discounting mechanism. I've said this before. Consider the following quote from Investopedia: The premise that the stock market essentially discounts, or takes into consideration, all available information and present and potential future events. When unexpected developments occur, the market discounts this new information very rapidly. That doesn't make any f*cking sense. For one thing, how can a market "take into consideration all potential future events"? Obviously it can't. That's absurd. That said, stocks should be expected to discount what we might call "known unknowns." That is, events that we know are likely to cause turbulence but that also admit of some indeterminacy regarding outcomes. Things that would fall into that category include the French elections and US tax reform. One thing I've noted repeatedly of late is that although European markets likely still aren't pricing in enough risk around France's electoral trial by fire, we're at least seeing some effort on the part of markets to price in the potential for a "sur
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