The stock market is composed of people buying and selling financial assets, in this case, stocks. These assets aren’t fundamentally different than a home, or a classic car in value, yet they are traded far more frequently.
Why do you think that is?
Well, one reason is because there are “Market Makers” people who provide liquidity to the market by being both a buyer and seller. They make a little money on each trade regardless of what side they take, they’ll buy a bit below the going price, and they’ll sell a bit above. It may only be a penny on a hundred dollar share of stock, but over millions of trades a day it adds up.
When a business makes money on any transaction, it’s in their business interest to compel their customers to do more transactions. So we have stock charts. Second-by-second analysis of the current market value, meant to get you to sell if you think it’s peaked, or to sell if it’s falling to quickly and you think your money isn’t safe.
Other assets don’t have this level of awareness. No one knows the precise value of their house every second, nor the value of a classic car they fixed up. No one is going to easily give these items up either. I don’t mean in the willingness sense, but in the actual taking possession of the assets.
Once you understand that pricing awareness is a way to manipulate you into making more trades, you can actively decide whether or not those are trades you actually want to make, or simply an effect of the influence the data is having on you.
We’re in the information age, and that information is being used to manipulate us in all sorts of ways. Combating that even just a little bit requires some awareness of where it is happening.