It is the obvious which is so difficult to see most of the time. Isaac Asimov, I, Robot Here’s a question with a seemingly obvious answer: How many stocks are part of the S&P 500? If you guessed 500, you’d be close, as there are 504 companies listed there today. You likely know that not all S&P companies have issued the same number of shares, nor do all share price match. Too obvious? Not really. Consider what you were undoubtedly told if you ever took an economics class. According to Paul Samuelson (Economics, 9th Ed., p. 63), “the equilibrium price, i.e., the only price that can last…must be at the intersection point of supply and demand curves.” Samuelson would have you believe markets have but one equilibrium point. But we know that is nonsense: 504 stocks in the S&P 500 form 504 quantity and price pairs. While they are viable, all, in the language of Hypernomics, enjoy sustainable disequilibrium as their stock prices exceed their costs. What’s really going on? It turns out the value of products goes up as producers add features customers like. At the same time, as prices go up, quantities sold fall. To see this phenomenon, one must employ Hypernomics. To find out how this works with as many as 8 dimensions, go to our new Hypernomics YouTube channel here:
https://www.youtube.com/channel/UCYsso5Yf0OFY3k78u5c30LQ
#hypernomics #marketanalysis #prices #demand
Comments