12/05/2007
"I can calculate the motion of heavenly bodies, but not the madness of people."
—Sir Isaac Newton
When it comes to figuring it out the direction of stocks, we can all learn a lot from one of the greatest scientific minds ever. Sure, we can calculate the motion of heavenly financial bodies, such as interest rates, P/E ratios and yields, but often a very big part of understanding financial markets is to know a little bit about market psychology. To put it in Newtonian terms, understanding the market is often an exercise in calculating the "madness of people."