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Rational Markets ?

By: Lonn Dugan
Wednesday, March 12, 2008 6:27 AM

Classical economic theory says markets are rational. 

According to the theory, we don't need to regulate markets or control them, because they always behave rationally.  

At risk of oversimplification, the idea is that principles of Supply and Demand take care of things.  If people want it they will buy it.  If it meets the need, they will buy more.  If they don't want it, or don't like it then it will die.  

No need for government to interfere with regulations, bailouts, etc. 

The idea is that you cannot legislate intelligence, morality, fair prices - or anything else when it comes to markets.   Hmmmm........

WHEN IT COMES TO REAL ESTATE.....

Was 2000 - 2005 Rational?  Was 2006 - 2007 Rational?  What would be rational for the market to do in 2008?

Penny for your thoughts? 

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Comments

Lloyd LaTour
Member Since '07

Lloyd LaTour said:

I think we are in a transitional stage right now. The market is correcting itself from the past years of growing inflation on homes.

I am very optimistic with what is coming. Just need a little patience and take advantage of the current market.

For myself I am educating myself on short sales so I can help potential sellers from foreclosures and keep doing what I have been doing by calling fsbo's and keeping in touch with past clients.

So I guess I can say I see light at the end of the tunnel

March 12, 2008 7:46 AM

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Lonn Dugan
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Lonn Dugan
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