You can watch supply and demand play out in a market by watching the stock ticker…says your economics teacher, says the stock trader, says the TV commentator

This is evidence that the scissors of supply and demand intersect. A core of economics 101. How about a game, said in a synthesized voice. change roulette to permit bets to be placed or exchanged until the wheel ball stops bouncing about. Or, how about, until the wheel stop turning. Will the bets be placed on winners. On more winners than if the bets must be placed before the ball is released onto the wheel. Your choice of game to play is? Well, we have run these games. We have recorded eye movements, heart rates, etc. Have used high stakes gamblers, day traders, economics students. The plots of “trades” and the plots of “bets” bounce about in strikingly similar patterns. Getting it right isn’t a matter of any “underlying” or “fundamental” matter related to “supply” and “demand.” The same curves occur when there is real money or fake money as trade instrument. Bragging rights are valued highly among the “professionals” in these experiments. Beating the wheel, or the “other” player works without impact to the stakes. Do you honestly believe that roulette is a matter of supply and demand? That the betting on it is governed by price principals.

Every story has an ending, many have a lesson. Most readers can’t create, so they often have difficulty knowing what the ending was, many fewer what the lesson was. This short remark ends with an observation made immediately after the DOT.COM collapse.

To the extent that venture capitalists are rational investors who backed (and continue to back) the worthy players within a given industry, there is some degree of strategy visible out there on the playing field.

The investors are more cautious and …this shake out basically will clean up the dead weight in the industry.

What did investors learn? They are still being held back by their concept that price has meaning. Price is only a signal. A sound, a flash of light, a number on a screen, a depression on a wheel. Price, supply and demand, these are the security blanket, worn, stained, smelling of spoiled milk. These things are what you cling to rather than howl. What trapped you was your confidence. It is time to wake up your alarm has rung.

You won’t know tomorrow what you don’t learn today.