A comment from Slate’s Today’s Papers caught my eye this morning:

While it is self-evident that when the stock market goes down, people are selling more than they are buying, all of the papers today zero in on the fact that it is mutual-fund shareholders who are bailing…

Well, in fact it’s not self-evident at all. It’s false. You can’t sell something unless someone else buys it from you, which means that while individual people can sell more than they buy, the market as a whole—- “people” in general—- can’t do that. The market sells exactly as much as it buys, by definition.

In Micromotives and Macrobehavior Thomas Schelling has a great discussion of how people often commit fallacies of composition like this.