All Stock Market Indices are Fata Morganas

All Stock Market Indices are Fata Morganas by Wim Grommen

Have you ever wondered what information a stock market index actually gives? An index point is not a fixed unit in time and does not have any historical significance.

Two measurements during a marathon

Imagine the following two measurements:

• In the first measurement, the average time is measured which 30 runners need to run a marathon.
• In the second measurement the same runners start a marathon. However, after 10 kilometres the 10 slowest runners are replaced by 10 fresh. After 20 kilometres again the 10 slowest runners are replaced by 10 fresh and after 30 kilometres this happens again. Again the average time is measured.