Discovering Markets

The Discovering Market Hypothesis (DMH) is a better way to explain price movements in financial markets than conventional theory.

Market participants communicate with others in the form of narratives to improve their understanding of their factual information before acting. Thus, market prices are shaped by the subjective interpretation of emerging facts and shared narratives. To understand how new narratives replace existing ones we recur to the theory of scientific revolutions. Winning narratives shape market prices, until their victory is confirmed by the facts, or they are knocked out by the facts or replaced by new narratives.

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