Dismal science

[Pierre Lemieux]

According to a Harris poll (http://www.harrisinteractive.com/news/allnewsbydate.asp?NewsID=356), 65% of American shareholders think that stocks will go down when the market opens on Monday, but only 1% intend to sell -- presumably out of patriotism. The fact that markets are down elsewhere in the world also points to a bearish Monday.
Now, if I am a patriot and believe that stock prices will go down but that nobody else will sell, I will reason that I am better off selling. Then, I don't contribute to the crash (for there won't be one) and don't lose my money either. (Moreover, not all stock holders are patriots, nor Americans for that matter.)
Consequently, one would expect a drop on American exchanges on Monday (5%-6%?). Any other ideas?

PIERRE LEMIEUX
Visiting Professor , Université du Québec à Hull
Co-director of the Groupe de Recherche Économie et Liberté (GREL)
Research Fellow, Independent Institute
http://www.pierrelemieux.org
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