41–50 of 524 posts
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No it's not. Finance bros like to tell themselves that, so that they can justify their place in morality.
I don’t think supply and demand has much to do with morality.
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I mean, that’s a straight up cartel. There’s nothing surprising about that. But the OP is confused about their comment about commodities in general. They are largely based on supply and demand, but most companies need to predict supply and demand months and years in advance because converting raw material into a sale to the end user is a multi month to multi year process, so a natural result is that the prices are ba…
> They are largely based on supply and demand, but most companies need to predict supply and demand months and years in advance because converting raw material into a sale to the end user is a multi month to multi year process, so a natural result is that the prices are based on speculation of supply and demand, months to years in advance. But that practically means they are based on speculation about possible future…
This statement almost seems tautological. Of course prices are based on speculation about possible supply and demand, nobody has a crystal ball that can tell them “actual” supply and demand.
In a competitive and liquid market, you expect prices to rapidly approach “optimal”, because otherwise there’s an opportunity there for someone make money out of the market inefficiency, buy correctly predicting when supply is high, and buying, then selling when supply is low. Which is exactly what future etc do, except without the need to actually move the physical commodity around.
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No it's not. Finance bros like to tell themselves that, so that they can justify their place in morality.
It's nothing to do with morality or any justification, it's just what it is. Since there's an instrument to gauge supply and demand, that instrument can also be wanted, so there can be supply and demand of the thing that measures supply and demand. You can also do "bad" things on first order by hoarding the items themselves.
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I don’t think supply and demand has much to do with morality.
Supply demand doesn't, but this rampant gambling is morally detrimental as it has unnecessary negative externality in society. They don't want to accept that their jobs are just a leech on society and has no other benefit than to fill their own pockets.
The more I read about prices of different commodities the more I realise the biggest movement in prices is not because of demand and supply but rather because of speculation and gambling. And how most of the news is manipulated. For example they are equating lithium price fall with stagnating car sales. Where as car sales might be stagnating but electric car sales are taking a larger portion of total car sales ie ele…
Speculation and gambling about what future prices will be are not the big issues here, the markets themselves are completely broken (by design).
I've seen them stuck at $1-3/cell for what feels like two years
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> They are largely based on supply and demand, but most companies need to predict supply and demand months and years in advance because converting raw material into a sale to the end user is a multi month to multi year process, so a natural result is that the prices are based on speculation of supply and demand, months to years in advance. But that practically means they are based on speculation about possible future…
> But that practically means they are based on speculation about possible future supply and demand, and we are more or less taking it on faith that that speculation is correlated to actual supply and demand. This statement almost seems tautological. Of course prices are based on speculation about possible supply and demand, nobody has a crystal ball that can tell them “actual” supply and demand. In a competitive and…
Exactly, no one has such a crystal ball. And this actually generally applies not just to future supply and demand, but even to the past: it's actually impossible to measure supply and demand across any significant industry, to check whether prices matched it or not.
And yet, economists and economical theory enthusiasts talk about the "law of supply and demand" as if it's some scientific observation, and not just a simplistic model that seems intuitive.
> In a competitive and liquid market, you expect prices to rapidly approach “optimal”, because otherwise there’s an opportunity there for someone make money out of the market inefficiency
You might expect that if you believe in the law of supply and demand, but as we were discussing, that is not how prices are actually formed, and anyone betting based on observed supply and demand (to the extent that it is actually possible to observe them) will be beat in general by others who are betting based on current speculation, which is how prices are actually formed.
For example, if you are betting that gain prices will increase in the winter because that's what you think they did every year, and ignore some prominent pundit predicting that they will decrease this year, you may well lose the bet if everyone else believes the pundit. And that will be true regardless of whether grain will be in low supply or not.
The more I read about prices of different commodities the more I realise the biggest movement in prices is not because of demand and supply but rather because of speculation and gambling. And how most of the news is manipulated. For example they are equating lithium price fall with stagnating car sales. Where as car sales might be stagnating but electric car sales are taking a larger portion of total car sales ie ele…
It's interesting to see that people still believe there is some type of fair price discovery when things like dark pools, market maker exemptions, naked shorting, tokenized securities, trillions in derrivative bets (hello 2008), spoofing (JP Morgan getting fined 1 billion after making 10 billion in profit in gold price spoofing) and so on and so forth exist. Speculation and gambling about what future prices will be a…
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It's nothing to do with morality or any justification, it's just what it is. Since there's an instrument to gauge supply and demand, that instrument can also be wanted, so there can be supply and demand of the thing that measures supply and demand. You can also do "bad" things on first order by hoarding the items themselves.
There is more to economics than supply and demand. This unnecessary gambling has too many negative externality and IMO no positive effects other than making some people some money with no work.