Friday, September 23, 2005

Don't Believe the Hype

Rich Kuslan once passed down some wisdom about commodities to me. He summarized the message of Stanford professor, Thomas Sowell:

1. There is in actual fact almost inexhaustible supply of commodity X.
2. Increased demand causes temporary dearth of supply.
3. Then people, especially pundits paid to sell papers, holler that the supply of X is running out.
4. Greater demand stimulates investment, advancing technology in procuring X
5. Ever greater quantities of X are thus procured.
6. Price of X falls as supply outstrips demand, and then stabilizes.

Professor Sowell has recently written how politics and media can fool us about “crisis.” The two part article can be obtained from the following links:

Part 1
Part 2

2 Comments:

At 6:07 PM, Blogger Aaron Koral said...

Hi Sam - I just wanted to commend you on an excellent post. I've heard of Thomas Sowell but never read any works of his until now with your link to his articles. Thanks for the links, and keep up the intelligent commentary.

 
At 6:09 PM, Anonymous QUALITY STOCKS UNDER 5 DOLLARS said...

Does anyone believe the hype.

 

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