Say’s Law and Supply, Not Demand, is the Key in Markets

In the 18th century, when apparently economists were still sane, the great economist Jean-Baptiste Say proposed one of the most important economic concepts of all time – simply put “supply creates its own demand”. It is a brilliant, simple, functional and entirely correct discovery in how the supply vs demand function actually works in the real world – outside of incompetent textbooks. The socialist economists of today, which is almost 100% of them, continue to dispute Say’s Law, and will never understand the simplistic brilliance of it. Because the Mensa economists of today have zero ability to understand reality, since it can only be the government and their policies of “equality” and of “productive activity stimulation” to be the catalysts for potential economic growth. Meaning DEMAND is the most important factor. At least that is what they teach at the esteemed Harvard U and every other “lesser” institution of “higher” “learning”. As an entrepreneurial capitalist, I understand how it is freedom which creates sustainable economic growth. It is not government “help”. Get out of the way, and let free humans work and compete and be productive. High taxes, tariffs (yes taxes), regulations, massive government – that is not the basis for freedom.

And this idea of supply being the very important factor, this plays into trading as well. For when are the best times/places to enter into a market? Sticking to the long-side of the market or stock, it is when there is the least amount of supply overhang. That is when the position would have the highest likelihood of rallying almost immediately. In fact, with a #4 rated trade setup you should be up on it literally within minutes at most. And what are these situations? Those were discussed, once again, in detail in premarket today. For those people working hard at this, it should be starting to sink in what I am getting at with the supply situation. It is mostly about the strong hands’ actions. They are the ones who form, allow for the tops and the bottoms, during accum and during distrib. In accum they are pulling out supply, in distrib they are adding supply. It is their actions which are paramount. It is the weak handed action which is where the uptrends are formed. Why? Their demand – in the trends, it is their demand, or not, which is the key. There will always be demand occurring in markets. But it is the supply situation that sets everything up, one way or another.

The video is goofy, but educational, and explains the absolute brilliance of Say’s Law.

About traderscott 1071 Articles
Trader Scott has been involved with markets for over twenty years. Initially he was an individual floor trader and member of the Midwest Stock Exchange, which then led to a much better opportunity at the Chicago Board Options Exchange. By his early 30’s, he had become very successful in markets, but a health situation caused him to back away from the grind of being a full time floor trader. During this time away from markets, Scott was completely focused on educating himself about true overall health and natural healing which remains a passion to this day. Scott returned to markets over fifteen years ago where he continues as an independent trader.

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