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:
“It is as real
as splinters stuck in your ear. The noise we steal
is half a bell. And outside cars whisk by on the suburban street
and are there and are true.
What else is this, this intricate shape of air?
calling me, calling you.”
—Anne Sexton (1928–1974)