Trashing economic axioms

Conventional economic thought is unable to explain a lot of events in the global markets today.

We humans are strange beings–we love to trash what we create, wealth or peace. It’s a harsh reality. Euphemistically we might call it a new age theory, or evolution. But the reality is that psychology is calling the 200-year- old economic thought as junk.

Economic axioms are not universal truths, some of them are far away from truth, it’s just that nobody questions them. The big one is the interest rate axiom. The lower the interest, the better it is.

Another axiom is making the ‘Buy and Hold’ strategy almost synonymous with investing. Well, if it worked for Warren Buffett, it may not necessarily work for us. Buffett started working at his father’s brokerage in early 1940s. This was after the depression. Buffett bought when nobody was looking at stocks, so he was more of a contrarian and market-timer than a buy-and-hold investor.

Of course, he held on to what he bought for more than a few futures trading days. These days they say, “If you don’t sell fast enough, you might hold for a long time.”

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One Response to Trashing economic axioms

  1. muthu says:

    Looks like an article of fashion, i mean it has lot of jargons only with little explanations and a very incomplete one.

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