I am willing to say precisely that. You talk about supply and demand, which is all very well... but you don't really talk about the why of supply or demand.
Let's look at the market performance of the last few weeks, which have been driven by the supply side. Why does a person decide to sell at fire sale prices?
The "why" part of the supply side is of course quite complicated -- but when there are "big things" afoot, I think we can look to those things for an explanation.
So for this market: people are selling because they're afraid, and want to get away from the investments that scare them (before they drop even further). Theirs is an emotional and therefore mostly irrational response. I think fears about the upcoming election may in fact explain a lot (though certainly not all) of the market volatility.
And then ... why does a seller suddenly become a buyer? Again, I think there's a huge emotional component to this -- probably less driven by McCain/Obama, than by a sudden (and irrational) hope that "things will go back to how they were."
IMO, "down" translates to a combination of election anxiety coupled with a generalized nagging fear about the markets. "Up" translates to anything that seems to assuage the nagging fear.
The upcoming election doesn't have an impact of any magnitude on the market .....McCain could jump ahead of the polls, even breaking statistical significance, and the market would still be in the position it is in. Yes, prices move due to supply and demand, but you ask why there is more supply than demand. Why someone would be willing to sell at fire-sale prices, with the intimation that it is due to insecurities that Obama might win. Well, that is not the reason. Even if McCain was 25 percentage points ahead, the market would still be in the dumps. Even if ACORN finally sank Obama, and it was a one-horse McCain race, the markets would still go down just as fast.
I know there are some that strive to distill everything into nice encapsulated talking points, but everything in the world does not revolve around Obama and McCain.
I was talking on another thread how a major US investment bank (one of the two remaining, and one that will very likely be taken over) was selling a certain stock in an African frontier market at a price equivalent to 5 US cents. They just gave a blanket order to sell, and not just in that country but in many others. For a while it did not seem that they may make it through last weekend. Were they doing that because Obama may win, or was it due to any liquidity that was being released into the market being immediately sterilized? The trillions in CDS securities that is just simmering in the books of institutions ....is it toxic because McCain may lose? When Central Banks are panicking, and nations that were said to be the best places to live in a year ago (Iceland) are now facing bankruptcy, is it because some skinny liar politico from Chicago has the gift of gab?
There are key fundamental issues that are fueling the panic, and while most panics are due to irrational fears there are some sizeable factors in this particular example that give a basis of credence to some of those fears. Markets in emerging markets (and some frontier markets) have faced massive repatriation of funds, as American funds, European family trusts, British unit trusts, assorted hedge funds, take out cash to try and survive the crisis. Injections of liquidity into the market place have been for the most part immediately sterilized the moment they hit, and banks refuse to lend to each other due to fears of what toxic messes the counter-parties may possess on their books.
McCain and Obama may as well be gnats on the wall.
The bump upwards that occurred on Monday ...I had said on another thread that it was simply a dead-cat-bounce, even though some people were saying that it was due to shunt-movements between the poll-numbers of Obama and McCain. Anyways, people can believe whatever they want to believe ....just yesterday I saw a thread that said that the author of Sherlock Holmes believed in fairies. People can chose to believe that the stock markets around the globe ebb and flow with the poll numbers of Obama/McCain, with the confluence centered on what Zogby/Gallup has to say about who is winning. That's alright.
A week ago I even saw a thread that said all that is going on is fake, and that it is simply the machinations of the media that have created a fake crisis. The media must have a lot of power to make that many large corporations, as well as a nation like Iceland, sacrifice themselves over a 'fake' crisis. The media must have tremendous clout to orchestrate over the loss of trillions and create such a wide-ranging shock event. Who knows ....maybe it is the media that always makes the world go round, the sun shine, and dew to form on the grass.
However, this particular crisis has some very real factors going on behind it, factors that go well beyond petty polls from biased pollsters. Even if the polls reversed today, and McCain was double-points ahead of Obama, the market would not shake itself and decide to go up 3,000 points.