A closer look
Discovered by Paul Samuelson in 1965, the Samuelson effect reveals a terrifying truth about futures markets: the closer a contract gets to its expiration date, the more wildly erratic its price becomes. If you're buying a wheat contract for three years from now, bad weather today doesn't matter much. But if the contract expires tomorrow, a single unpredicted rainstorm will trigger absolute chaos on the trading floor. It proves that financial markets aren't cool, calculating machines; they are hyper-reactive anxiety engines that completely lose their minds when a deadline approaches.
