Making Markets
Mark Dow: A Behavioral Macro View - [Making Markets, EP.13]
Jan 19, 2024
Mark Dow, former economist with the US Treasury and the IMF, talks about why economists struggle with trading, the significance of the Federal Reserve, misconceptions about monetary policy, the current risk cycle, modern monetary theory, asset price inflation and wealth inequality, and analyzing the state of the housing market.
57:25
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Quick takeaways
- Economists' mindset and assumptions about rational behavior and efficient markets make them poor traders and investors.
- Monetary policy may have less impact on the market than commonly believed, with initial conditions and market behavior playing a greater role.
Deep dives
Economists as bad traders and investors
Economists often make poor traders and investors due to their mindset and assumptions about rational behavior and efficient markets. The economist mindset leads them to believe that if they like something at a certain price, they will like it even more at a lower price. However, this mindset can be dangerous, as being wrong just once can lead to significant losses. Traders, on the other hand, focus more on behavioral finance and technical analysis, recognizing that psychology and market patterns play a more dominant role in short-term market movements than fundamentals.
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