False Market

Is this…real? Are you real?

Whoa, whoa, whoa…let’s back up, beep beep beep. And look at markets.

False markets are markets where the prices are reflective of manipulation of information. In a perfectly free market, everyone has all information available to them, allowing both buyers and sellers to make the best decisions. In a false market though, buyers are misled, causing them to make decisions they wouldn’t make if they knew the truth. Thus, a false market.

For instance, all schemes and fraudsters are creators of fake markets, selling buyers stuff they know doesn’t work or isn’t worth the price by a longshot. In the stock market, investors may create a false market from overreacting to news…since, you know, the news likes to make a big deal out of everything. Gotta get that ad revenue to stay alive. In other cases, though, investors are misled with blatant lies.

For instance...not naming names, but…this one guy tweeted that certain companies were under investigation (totally not true at all), which sent their stock prices plummeting to the stock floor.

As more and more people are entering the investment world through the much-hyped cryptocurrency market, it’s not uncommon for false markets to be created. People hype a certain cryptocurrency, causing the price to rise, before cashing out themselves, making a run for it, then disappearing (because, well, all the lies).