Business Cycles
A particular type of trader Black makes special mention of is the entrepreneur. Like the above-mentioned traders, entrepreneurs have theories about what will happen and what is happening. In this case, though, they have theories as to what people want. When they are correct, there is a little boom; I make what you want, you make what I want, we trade and we are happy.
But the world has noise and entrepreneurs make mistakes. They make things others don't want. Thus, they don't work as hard, money is wasted and the economy is harmed. When this happens on a massive scale, there is a bust.
Critics argue that this disobeys the law of large numbers; with so many entrepreneurs trying, the aggregate success rate will be constant. (This assumes that producers are more or less independent; critics say they are, proponents say they're more interconnected.)
Read more about this topic: Noise (economic)
Famous quotes containing the words business and/or cycles:
“Being good in business is the most fascinating kind of art.... Making money is art and working is art and good business is the best art.”
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