Its been quite a while since my last post - infact its been months. During this period I have been doing some much required research work for my dissertation. The one thing I have learnt which seriously takes no MSc in Finance is that the market does not work on rules or mathematical formulae.
We have been taught various financial lingos like - correlation, in the money, options, derivatives etc. Although interpretting the various trends in the market is easier now, its not predictable at all. The fact is that only 27% of the financial market is run by taught professionals, the rest are self-taught and are people in other professions as well.
If that be the case, then why is it that we try so hard to understand how the market works ? Its one of those questions that cannot be answered. Like in medicine - my friend said they have been doing research for ages on how the brain works. There is no concrete answer, but a lot of new discoveries and the same happens with the financial market. Every study brings up a new problem and hence the quest for another solution.
"Mounting optimism that the US economy would outperform the rest of the developed world pushed the dollar to multi-month highs against leading currencies this week as the oil price resumed its downward path, providing support for equity markets." - This was the opening paragraph on the 8th of August 2008 for an article titled 'Overview: Dollar rallies while oil slides' in the Financial Times.
My research work lead me to the conculsion that there was a positive correlation between oil prices and the value of the US dollar since it was denominated in USD. But now I am confused.
Correct me if I am wrong but the article suggested that a gentleman's comments made the dollars price go up - OPTIMISM !!!!
Well honestly trying to understand the whole debacle has left me thirsty for some serious answers. Whilst I go refresh my brain with more knowledge to complete this article - please feel free to leave some comments and suggestions that might help.
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