TIME
Time, the market component few participants rely on when making trading decisions, illustrates the degree of change between need and price in the marketplace. It is a known constant, a measurement which participants inadvertently use when determining value through transactional data. Time impacts trade by regulating the duration during which buying (consuming) and selling (producing) can take place.
The market, in facilitating trade, uses price to promote opportunity and uses time to regulate it. In other words, the market uses time to regulate how long a given opportunity will be available, insuring that when price promotes opportunity to the point of reaching excess, that price is held in check. The market continually uses time to regulate itself throughout its structure.
Example of how time regulates price activity is illustrated in the example previously used to illustrate how price promotes activity. In the post-holiday sale, while the department store management was willing to sell at prices half of those charged prior to the holidays, management was not willing to offer this below value opportunity for long, but only until the current inventory is sold. Had the store extended the opportunity to purchase merchandise into what is considered the regular shopping season, the lower post-holiday sale prices would soon be considered the new value area. This is something no retailer would want to see. Retail stores and other producers/sellers use the lower excess price to promote activity only so long as it fulfills the purpose behind the excess price. Interestingly, the sharper the price reduction or the farther the price offered is below value the shorter the time period during which the opportunity will be available.
Both consumer and producer are interested in generating the maximum amount or activity at the most advantageous price possible. Thus, in reaching a balance, the market will produce extremes in the marketplace that will not hold over time, since they will be attractive for one side, but not attractive for the other. In order to balance, the market needs to go too high and too low to find an area that is fair for both parties over a period of time. It is these excesses on both sides that give the market its natural organization and provide information to participants.
J.Peter.Steidlmayer Markets and Market logic
Time, the market component few participants rely on when making trading decisions, illustrates the degree of change between need and price in the marketplace. It is a known constant, a measurement which participants inadvertently use when determining value through transactional data. Time impacts trade by regulating the duration during which buying (consuming) and selling (producing) can take place.
The market, in facilitating trade, uses price to promote opportunity and uses time to regulate it. In other words, the market uses time to regulate how long a given opportunity will be available, insuring that when price promotes opportunity to the point of reaching excess, that price is held in check. The market continually uses time to regulate itself throughout its structure.
Example of how time regulates price activity is illustrated in the example previously used to illustrate how price promotes activity. In the post-holiday sale, while the department store management was willing to sell at prices half of those charged prior to the holidays, management was not willing to offer this below value opportunity for long, but only until the current inventory is sold. Had the store extended the opportunity to purchase merchandise into what is considered the regular shopping season, the lower post-holiday sale prices would soon be considered the new value area. This is something no retailer would want to see. Retail stores and other producers/sellers use the lower excess price to promote activity only so long as it fulfills the purpose behind the excess price. Interestingly, the sharper the price reduction or the farther the price offered is below value the shorter the time period during which the opportunity will be available.
Both consumer and producer are interested in generating the maximum amount or activity at the most advantageous price possible. Thus, in reaching a balance, the market will produce extremes in the marketplace that will not hold over time, since they will be attractive for one side, but not attractive for the other. In order to balance, the market needs to go too high and too low to find an area that is fair for both parties over a period of time. It is these excesses on both sides that give the market its natural organization and provide information to participants.
J.Peter.Steidlmayer Markets and Market logic
Markets are not efficient, rather they are effective - Jones