front. At the end of the worst possible day for stocks, the market contains the same number of shares it started with. The market is not a different size, we just like it less. And this isn’t some fuzzy hormonal mood we’re in. Our feelings can be measured precisely, in dollars. In fact, when we own any “financial instrument” (as people in the money business call anything worth money), what we basically own is an opinion. When the British pound loses value, the number of pence in a pound doesn’t change. We just don’t feel the same way about pounds anymore; we’re nuts about Euros now. It always takes the same number of pigs to make 1,000 pork- belly futures, but next year’s bacon suddenly smells bad to us. One share of common stock continues to represent the same percentage of a corporation’s assets, and the corporation is probably not growing or shrinking very fast, but our love for that corporation can swell or pop overnight. We have an opinion. That opinion is a price. And since prices are constantly changing, our opinion is always about to be wrong. Think of the stock market as an endless Gallup poll with 207 billion things that people can’t make up their minds about. So in order to understand the stock market, we have to realize that, like anything enormous and inert, it’s fundamentally stable, and like anything emotion-driven, it’s volatile as hell. Got that? Me neither. Now what about all those people running around on the stock-market floor in a state of utter chaos? There isn’t any. The New York Stock Exchange is enmeshed in rules. There are rules about everything. To sell even one share of stock in the U.S., a corporation has to file a “full-disclosure statement,” complying with the Securities Act of 1933. The law itself is eighty pages long with four hundred additional pages of Securities and Exchange Commission regulations. Then, to get a stock “listed” on the NYSE, the corporation has to meet further requirements about the size, value, and soundness of the offering. Once a stock is listed, there are myriad rules about how it can be bought and sold. And no running around is involved; there’s a rule against it. (Formidable power walking is allowed.) The NYSE is one of the most organized places on earth. But the organization is so complex that I stood, stupid, on the trading floor for two days before I noticed that there was one. During my first hour in the Main Room, I didn’t notice anything at all. I was too fascinated by the littering. You don’t see good littering in America anymore. In the 1950s, people used to chuck their newspapers in the gutter, heave
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