Noise (economic)
Economic noise, or simply noise, describes a theory of pricing developed by Fischer Black. To Black, noise is the opposite of information. Sometimes it's hype, other times it's inaccurate ideas, other times it's inaccurate data; noise has many forms. Noise is everywhere in the economy and we can rarely tell the difference between it and information.
Noise has two broad implications.
- It allows speculative trading to occur (see below).
- It is indicative of market inefficiency.
Read more about Noise (economic): Finance, Business Cycles, Econometrics
Famous quotes containing the word noise:
“We need to find God, and he cannot be found in noise and restlessness. God is the friend of silence. See how nature—trees, flowers, grass—grows in silence; see the stars, the moon and the sun, how they move in silence.... We need silence to be able to touch souls.”
—Mother Teresa (b. 1910)