Have a Market Mentality

By, 10/27/2006

Capital markets are all about innovation, technology, dynamic change, and the flow of information. They connect available resources to those who can turn them into higher returning assets with ever-increasing efficiency. The resulting benefits to society are tremendous.

Sometimes these altruistic notions are lost to us amid daily headlines droning on about mundane financial ratios, accounting standards, and economic indicators. We delve into the tedium of Fed minutes and fuss over a penny or two of earnings on an income statement all in the name of improving efficiency and returns. That's the nitty gritty of a market mentality. But markets aren't just for stocks and bonds—they're pervasive. Today we offer you a broader perspective on free markets with two interesting examples.

Best-selling author Michael Lewis is famous for applying the results of market competition to sports. Two of his bestsellers, Moneyball, and most recently The Blind Side, are examples of how sports franchises utilize information, technology, and quantitative methods of valuing players as "assets" (much the same way us asset managers value stocks) to improve success and gain competitive advantages.

Going beyond 'Moneyball'
by Brian O'Keefe, Fortune

An even more obvious use of the market mentality is in emerging companies such as Tradesports, which has created an accurate way to track potential outcomes of elections and other non-financial events. People trade contracts on the site, placing a value on the probability of a specific outcome in much the same way a stock is traded on the open markets.

For instance, you can track what the market thinks of the GOP's chances of retaining the House in the upcoming election by observing the prices of the contracts tied to the election. (Currently, the Tradesports market believes the GOP has a 35% chance of retaining the House.) The equilibrium price (just like the price of a stock) reflects the totality of what is widely known about the election. Such markets have often proven more accurate and timely than most political pundits. A huge gain in information and efficiency! You can check the election contracts and others at

The common characteristic between these examples is they're constantly improving and pushing things forward. Whether it's sports, politics, or stocks themselves, markets fuel the spirit of innovation and free competition that spawns a better way. So keep the market mentality on your mind, even when you're not trading stocks.

*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.

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*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.


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