The Trump effect has rallied US markets – but it's based on illusion | Robert Shiller

The perception that the president-elect is a business genius and too much focus on the Dow Jones have led to excessive optimism

Speculative markets have always been vulnerable to illusion. But seeing the folly in markets provides no clear advantage in forecasting outcomes, because changes in the force of the illusion are difficult to predict.

In the US, two illusions have been important recently in financial markets. One is the carefully nurtured perception that President-elect Donald Trump is a business genius who can apply his deal-making skills to make America great again.

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