Markets personified

Does the market have a mind of its own?

Investors often talk about capital markets like they’re people. Markets “expect” lower interest rates. They get “excited” about stimulus. They “want” certainty. This isn’t shorthand, it reflects something real about how markets work.

With tariff-driven volatility and geopolitical fracturing creating headlines, how advisers interpret and explain price movements has never mattered more.

Mr Market, revisited

Ben Graham’s ‘The Intelligent Investor’, gives us Mr Market, a manic-depressive business partner who swings between euphoria and despair. In his manic phases, he’ll pay over the odds for shares. In his depressive phases, he’ll sell at a discount. The calm investor profits from his mood swings.

Most people treat this as a useful analogy. But does the personification run deeper?

Markets as information processors

Friedrich Hayek argued that markets are dynamic information-processing systems. Buyers and sellers act on local knowledge, but prices aggregate that information through spontaneous order — structure that emerges from the bottom up, not the top down.

This influenced the Efficient Markets Hypothesis (EMH): prices already reflect available information, making it difficult to consistently beat the market.

The EMH has its critics, information bottlenecks and irrational behaviour are real. But you don’t have to believe in efficient markets to accept that prices reflect aggregate probabilities about future outcomes. That’s why Mr Market can be inefficient, and why calm, disciplined investors can profit from it.

Do markets have beliefs?

The philosopher Dan Dennett argued that attributing beliefs and desires to a system, “the intentional stance”, is justified by how much it helps predict its behaviour. Applied to financial markets, this holds up well: treating prices as reflecting aggregate beliefs about future outcomes, helps anticipate how markets respond to new information.

Markets aren’t always rational or consistent. Bond and equity markets sometimes tell conflicting stories about inflation. But people contradict themselves too. What matters is that markets, like people, mostly behave predictably according to what they collectively believe and want.

What this means for advisers right now

The practical question isn’t whether markets have minds. It’s whether you can interpret what those minds are saying, and translate that into language clients can act on when they’re rattled.

Consumer Duty has sharpened this challenge. Preventing foreseeable harm now includes clients reacting emotionally to volatility or misunderstanding the role of risk in their long-term plan. With the FCA’s 2026 supervisory focus on evidencing good outcomes, it’s not enough to say clients are getting good results, you need to show it.

That dual pressure, nervous clients and a proof-hungry regulator, makes the ability to read and explain market signals more valuable than ever.

That’s what we do at Tatton. Our investment team reads the aggregate signals, separates durable shifts in expectations from short-term noise, and builds portfolios that behave the way advisers and their clients need them to. It’s why more than 1,200 IFA firms trust us with over £24.8bn of their clients’ assets, as at March 2026.