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The Behavioral Psychology Behind (And Following) Market Crashes
We continue our bedside reading series started last week with with a presentation of Didier Sornette's terrific "Critical Market Crashes" with this week's even more entertaining, introspective and troubling "Psychology, Financial Decision Making, and Financial Crises" by Tommy Gärling and colleagues of the Universrity of Gothenburg. The volatile nature of "product markets" has long troubled thinkers, theoreticians and philosophers alike who have struggled to explain why something which should on its face be efficient, be able to experience such demoralizing and turbulently violent events as May 6, Black Monday, and other historical crashes. Gärling proposes: "In product markets with full competition, prices represent the true value of the products offered. This does however not seem to hold in stock markets where stock prices, due to excessive trading, are more volatile than they should be if reflecting the true value of the stocks. Psychological explanations include cognitive biases such as overconfidence and overoptimism, risk aversion in the face of sure gains and risk taking and loss aversion in the face of possible losses, and influences of nominal representation (the money illusion) of stock prices. If no cognitive biases (strengthened by affective influences) existed or only some actors were susceptible to such biases, individual irrationality in stock markets would possibly be eliminated. This is however not what evidence indicates."
What follows is a fascinating inquiry into the human mind and some of its hardwired traits, and an attempt to explain not only the shock and awe at seemingly irrational market reactions, but people's seemingly pre-programmed biases and responses to various market-induced stimuli, as well as inherent bullish and bearish outlooks that have been known to erupt into outright confrontation and outright drunken bar (and trading desk) brawls on occasion. The paper also goes into an in depth analysis of bubble formation and how this may be borne out of the human mind more so than out of monetary or fiscal largesse.
The paper's most relevant for the current situation observation has to do with the topic of integrity and trust:
A detrimental consequence of financial crises is the loss of trust in financial institutions. Seven determinants of trust (and regaining trust) in financial institutions are discernible: competence, stability, integrity, benevolence, transparency, value congruence, and reputation.
We suggest that all those who wonder why next week ICI will report the 22nd consecutive weekly outflow from funds familiarize themselves with the list above, as currently none of the gating conditions are met.
For all those with time limitations, the paper's summary findings, especially when juxtaposed with the writing of Cognitive Dissonance, can best be captured by the following graphic:
For everybody else, this weekend's recommended reading is below.
"Psychology, Financial Decision Making, and Financial Crises" (pdf)
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I agree with all that and wonder if HFT these days has evolved enough to factor in reputation and integrity. I would be surprised if they did not.
Speaking for humans, I pretty much got out of the market in Nov 2007 when I saw no good news on the horizon. There seemed to be no benevolence and my value congruence got skewed. People have feelings too, afterall.
Ah.. speculation maybe? When money can be borrowed into existence at rates lower than speculative bubbles are growing, maybe we might consider a feedback loop?
Isn't keeping these from getting started what the Fed is supposed to do?
I think the result will be that we recognize capitalism and free markets are not synonymous. A market needs a medium of exchange in order to function and when a private, for profit corporate entity is given the right to own, manage and generally take full advantage of that function, there is no free market, because it is a wholly owned subsidiary of this corporate medium.
As we have full proof of, with a hollowed out economy and a bloated financial sector that now owns the political system.
Control of the money is not a function of the government. Control of the money is the government. The Golden Rule: Those with the gold, rule.
"A market needs a medium of exchange in order to function and when a private, for profit corporate entity is given the right to own, manage and generally take full advantage of that function, there is no free market, because it is a wholly owned subsidiary of this corporate medium."
there is no way to have an honest economy when it is founded on a dishonest monetary system
without an honest economy there is no way to have an honest society because some people will be motivated to take advantage of the dishonest monetary system
fiat currency is dishonest money - always has been - always will be
Taleb has this to say about the foibles of traders:
"I'm as good as my last trade" --> Prospect Theory --> Looking at differences, not absolutes, and resetting to a specific reference point.
"Soundbite effect" or "Fade the fears" --> Affect heuristic, risk-as-feeling theory --> People react to concrete and visible risks, not abstract ones.
"It was so obvious" or "Monday morning quarterback" --> Hindsight bias --> Things appear to be more predictable after the fact.
"You were wrong" --> Belief in the law of small numbers --> Inductive fallacies; jumping to general conclusions too quickly.
Brooklyn smarts/MIT Intelligence --> Two systems of reasoning --> The working brain is not quite the reasoning one.
"It will never go there" --> Overconfidence --> Risk-taking out of an underestimation of the odds.
hilfuckingarious!
Another great day of information Tyler & staff.
Question: Have you connected the dots with QE2 crisis?
Hint: I will start with most recent and digress to earlier years.
TAPI Partners to Hold Bid for "Global Energy Giant"
http://www.eurasianet.org/node/62049
SNN - We bring Corporatocracy, The Spice must flow
http://www.youtube.com/watch?v=kAhtMurp6LU
A Pipeline to Peace
http://www.carnegieendowment.org/publications/index.cfm?fa=view&id=16789
Iran-Pakistan 'peace pipeline' deal
http://www.youtube.com/watch?v=_abw6TJImQQ
?????????? ???? ? ????? ? ???????????
http://www.youtube.com/watch?v=qBfXzn-vbIs
OMG
WB7 has joined the ranks of ZH contributors. Wonderful!!!!
Though I suspect anyone who wants to be a contributor must have a screw loose. :>)
Congratulations WB7.
Now that guy really has a dental problem!
I hope he has dental insurance...
You see, I'm putting my faith in algos. I figure they're mentally far more stable and probably the only ones still in the market. Just kidding of course. Great read.
Congratulations to williambanzai for receiving pic posting privileges.
Nice first image.
You blokes all read that whole tome already?!
Dont hurt'em Hammer.
Its not the kind of thing that can be taken lightly im afraid, the amount of work referenced is staggering. I have read up until Affective Influences and to be honest I am only wasting my time if I continue so that’s where i will stop today. I could read it quickly, but i want to take something out of it, get up to speed with the true nature of the arguments and see if i can go on and do some rewiring of my own risk profile...it needs to be studied, and since i do more risk taking than studying these days, it might be time to reverse the trend a little.
I have seen most of the methods in operational research books and the like, but its something i was never really willing to appreciate due to the laborious nature of the actual mathematics. But the more I think about ways of handling risk these days,(especially since I am trying to live off my trading profits) the more I am blown away by the possibilities. I think most people here already get the gist of the paper, and have probably heard most of the arguments. By the sounds of it though, they probably don’t need to accept the implications on any significant level.
>This does however not seem to hold in stock markets where stock prices, due to excessive trading, are more volatile than they should be if reflecting the true value of the stocks.
Whats this "true value of the stocks"?
>individual irrationality in stock markets would possibly be eliminated. This is however not what evidence indicates.
This seems to imply there is a objectively rational way of acting. How can objective rationality be defined or achieved? Does objective rationality even exist?
Fuckin' cog-sci psychologists. I studied with assholes like this awhile back. The good Piled higher Deeper ones, at that. I mean doctors. With their reams of "evidence."
Start the investigation at any arbitrary point and take for granted that no one would EVER question the empirical/rational/scientific basis you have for the terms you open the investigation with. As soon as someone asks about the foundations, propose a study or show off your last model.
While on some level I appreciate the paper as amusing, I take issue with any method that throws around the term "value" with no effort made to appraise how it is itself a contextually-shaped abstraction without any grounding in measurable or demonstrable external realities. Speculate if you want, but let's not pretend it's science.
Carry a tray of lines of cocaine and wads of c-notes into two very different roomsful of people and see which disappears first.
Then maybe we start the talk about what "value" means.
(If I'da had any respect for authority, I woulda stayed in academia.)
May I suggest that you might not understand the term "science", other than how it's used in modern society. For most people, it means something solid, quantifiable, measurable, maybe even something that can be held in their hand. And based upon how science is defined in today's society, your view would be mostly correct. Here are the top definitions from dictionary.com
1. a branch of knowledge or study dealing with a body of facts or truths systematically arranged and showing the operation of general laws: the mathematical sciences.
2. systematic knowledge of the physical or material world gained through observation and experimentation.
3. any of the branches of natural or physical science.
4. systematized knowledge in general.
5. knowledge, as of facts or principles; knowledge gained by systematic study.
6. a particular branch of knowledge.
7. skill, esp. reflecting a precise application of facts or principles; proficiency.
Notice the emphasis on "knowledge" and "facts" which implies "truth" and "knowing". These are all terms that would be used to describe something that's unchanging. Of course, it's use is based upon the notion that the person "knowing" is all knowing and thus knows there is nothing left to know. Or at least that they know the limits of what they know and don't know. Nothing could be further from the truth.
It's astounding how often people in general and scientists specifically accept this concrete definition considering that the hundreds of fields of science all sit on quick sand. In nearly every field of "science" the knowledge base is constantly shifting, with new information, discoveries and theorys presented on a near daily basis. The world isn't changing so much as our understanding of it is.
This hardly sounds like a static system to me. But static is exactly how most people view "science". When I bring this up to men of "science" and to laypeople, I'm told that of course there are areas of "knowledge" that are still expanding. But for the most part, our world has been described to a great extent and that this description won't change very much in the future. It's amazing the level of hubris this view or belief represents.
Based upon what I read in many science journals of various disciplines, the "known" world is constantly undergoing re-examination, leading to new descriptions of previously held "static" beliefs. Rather than pushing the edges outward from a stationary core, what appears to happen is an explosion originating from all points at once, thought some points are exploding faster and more violently that others.
I've often wondered if it's hubris or fear that leads both the scientist and the general public to declare something as "known", thus static and unchanging, when we are surrounded by a world that is not very well understood, regardless of our belief that it is. What we have today is a world that we understand enough that we can begin to manipulate it. But we are not advanced by any stretch of the imagination nor do we even possess a decent grasp of what the limits are, never mind what we currently "know".
Actually when we say something is "known" what we're really saying is that many people are in agreement as to the name and currently accepted description, not that it is understood with such clarity that our understanding can't change. 700 years ago, the world was "known" to the flat. Isn't it possible that many of the things we "know" today will be seen differently in 500 or 1,000 years. So why are we so blessed with such great knowledge and understanding that we can declare anything as known and thus unchanging? I know something today simply because I didn't know it yesterday, not that I understand with such perfection that I never need to look again.
When I read older books, say 50 or 100 years old, I come across a more precise definition of science, one that is more accurate because it's less solid. Science is discussed more as a thought process or a method of inquiry or a window through which we look at our world. Science is described as a point of view, a description we use to describe what we see so that others can accurately and consistently understand what we are talking about.
We are beginning to name and describe "things", then we agree that everyone will use the same names and descriptions of these "things" so that when we talk about those "things" we're all using the same basis. This is not understanding the "thing", but rather this is understanding that we are all talking about the same "thing". Rather than describing science as something hard and unchangeable, science should best be described as a perspective or a method by which we can view our world.
From this point of view, the paper discusses the study of market psychology in such detail and from so many points of view that it is a science, a process of study, a point of view, a description of what is studied. The paper is not guilty of proclaiming something as hard and fast. There are plenty of statement/sentence qualifiers to preclude that notion.
May I suggest the person commenting above may be biased in how s/he is judging the paper. Of course, that was apparent from the first sentence.
No, CD, you've got me all wrong. I'm pretty well-versed in the historical development of scientific inquiry, starting with the ancient philosophers right up through the post-quantum models of subatomic interactions.
My view has nothing to do with common conceptions of the difficulties with a comprehensive theory of knowledge or how humans structure their thought, and everything to do with the RESULTS of your system of investigation.
If it can't generate predictive power, it's worthless.
Got it. I now see your point of view and I agree with you up to a point. In fact, I've thought about this quite a bit and I'm beginning to understand that the psychology of crowds is remarkably different than the individual. More so even than the "science" of psychology says it is.
Add in the terrible distortions that are affecting the various markets and predicting is difficult. Even old standbys, such as TA, which I believe increases it's predictive powers during market stress, has broken down to some extent under the manipulation. Nothing seems to work anymore because the market is less pure than it was before. I've never believed the markets were ever pure to begin with, but with the whale of the government and the Fed taking up most of the room in the swimming pool, things just don't work right anymore.
Thanks for responding.
Time to reread Asimov's 'Foundation' Trilogy. Is the Fed 'The Mule' in disguise ?
From the article:
For those who wish to follow Tyler's reference without slogging through the search feature, below is a trimmed list of some of my ZH articles which I am once again shamelessly promoting. Sadly, I do not have a web site you may visit to increase page views nor a book to sell (yet) or paid services to subscribe to.
Give me time. I'm sure the capitalist urge to sell my soul will overcome me any second now. For now I must be content with inflating my ego. :>)
Please note that my 5 part series "Welcome to the Insane Asylum" and my 2 part series "What if it Doesn't End With a Bang But With a Whimper" are both posted on Scribd.com and are available for download as a .PDF file. The links for all the articles and the 2 .PDF files are below.
http://www.zerohedge.com/article/end-empire-%E2%80%93-propaganda-and-american-myth
http://www.zerohedge.com/article/end-empire-waking-zombie-nations-psychology-consciousness-and-egoic-mind
http://www.zerohedge.com/article/avalanches-and-tipping-points
I'm expanding this fictional story (below) into a novel, thus the reference above to a coming book.
http://www.zerohedge.com/article/call-%E2%80%93-fictional-look-25-minute-market-crash
http://www.zerohedge.com/article/and-so-my-fellow-americans-ask-not-what-your-country-can-do-you-%E2%80%A6%E2%80%A6%E2%80%A6
http://www.zerohedge.com/article/capitalism-rationalization-rape-robbery-and-pillage
Here is my 5 part series along with the Scribd.com link for the entire series.
http://www.zerohedge.com/article/welcome-insane-asylum-%E2%80%93-our-collective-psychosis-chapter-one
http://www.zerohedge.com/article/welcome-insane-asylum-%E2%80%93-our-collective-psychosis-chapter-2
http://www.zerohedge.com/article/welcome-insane-asylum-or-how-we-learned-stop-worrying-and-love-big-lie-chapter-3
http://www.zerohedge.com/article/welcome-insane-asylum-%E2%80%93-making-reality-fresh-daily-chapter-4
http://www.zerohedge.com/article/welcome-insane-asylum-%E2%80%93-seeking-moral-courage-chapter-5
http://www.scribd.com/doc/33507389/Welcome-to-the-Insane-Asylum-Our-Collective-Psychosis
Here is my recent 2 part series "Bang/Whimper" along with the Scribd link to the entire series.
http://www.zerohedge.com/article/what-if-%E2%80%9Cit%E2%80%9D-doesn%E2%80%99t-end-bang-whimper-mind-games-chapter-one-two
http://www.zerohedge.com/article/what-if-%E2%80%9Cit%E2%80%9D-doesn%E2%80%99t-end-bang-whimper-mind-games-chapter-two-two
http://www.scribd.com/doc/37045448/What-if-It-Doesn-t-End-With-a-Bang-but-With-a-Whimper
'I'm sure the capitalist urge to sell my soul will overcome me any second now. For now I must be content with inflating my ego...'
Don't be so hard on yourself CD, just do whatever the spirit moves you to do...
As you well know the ancients were remarkable robust, and in many ways more accurate as to what makes man tick.
Since the markets are the dataset of humanity, this insight, which in many cases is hiding in plain sight, is unobserved by those who through hubris have eyes that don't see.
The behavioral psychology behind those that opine about behavioral psychology would probably be a more informative read!
The markets are undeniably per empiricism fractal-based. However Gann, Astro, Demark, Elliot/Fib and the like are but illuminated shapes.
Vibrate at ya later...
Thanks AM.
When I wrote that sentence, I was taking a swipe at some of my more vicious critics here on ZH who seem to think that since they are motivated by ego inflation, everyone else is exactly the same way to the exact same degree. Thus since I have nothing to sell, but I write about psychology and use myself as a frequent example of the follies of humans, I must be solely ego motivated to write about it.
Speaking of fractal, ever since I began reading you here on ZH (nice to have you back BTW, hope you don't disappear once the code writing is done) I've been think more and more about fractals and human psychology. There are massive parallels that go way beyond what I first acknowledged a few years ago. Of course, this must be the case since fractals are everywhere and the basis for the very fabric of life and matter.
'fractals are everywhere and the basis for the very fabric of life and matter'
You are of course correct CD... the rabbithole runs very deep indeed.
For your entertainment here are some not so 'random' musings from the archives...
Am constrained from expanding upon the subject even though current studies are oh so much more 'advanced'... but years(?) from now perhaps will be able to.
Or maybe that will be left to my children.
Best to you.
http://www.google.com/search?q=%22fractal%22+site%3Ahttp%3A%2F%2Fanonymo...
Wow, what a treasure trove. I've bookmarked your search results in multiple locations. Looks like there's plenty of food for thought in anticipation of a long cold seasonal, social, political and economic winter coming round the bend. Gotta learn to love the turning points of those 8o year long cycles (fractals within fractals) or be run over by them.
Thanks.
No time for a careful reading today, but my impression is that this is a superb amalgamation of our current understanding of how homo saps actually make financial decisions -- part lizard brain, part ape brain, maybe a dab of computer, all governed by cognitive and emotional programming that has evolved over eons for survival in a radically different world. Hopefully, this line of study will put to rest (finally!) the rational, self-optimizing automata of classical economics. My dream is that the entire campus housing the Chicago school and it's associated Auks sinks back into the earth, like Mordor at the end of the tale. It is a noteworthy accomplishment to be not only wrong, but fabulously, dramatically, superlatively wrong. Perhaps in another 50 years public policy will catch up to the best current thinking.
I keep hearing a paraphrase of that line from "The Usual Suspects" going through my head these days: Just as the greatest trick the devil ever played was convincing us he didn't exist, the greatest trick the financial sociopaths ever played was convincing the average person that the "stock market" was a great way to save for retirement. Still, how can we blame them for wanting to harvest such a bumper crop? If you saw a Benjamin lying on the street wouldn't you pick it up?
I studied economics for upwards of a decade at a top university. There is no such thing as "panic" since investors are assumed to think and behave "rationally".
When I was taking the various courses for my CFP I was amazed how often is was pounded into me that we all act rationally. From the very start I realized what I was learning was bull-crap, but I finished the courses and took the massive exam for the designation, not for the knowledge. In fact, some of this screwed up learning still lingers 10 years later to cloud my vision.
Anyway, I've often wondered what insanity is behind such......well.....insane thinking. One look around can quickly confirm the totally irrational actions of your friends, family and yourself.
To go a bit over the edge and into dark territory I've begun to think that this "belief" was deliberately planted and cultivated to created the wonderfully enslaving and wealth extracting economic system we live under today. This isn't as crazy as it sounds when you consider so many beliefs today were manufactured by "special interests", be they political, social or economic.
To point to one political example, the whole idea promoted by the younger Rumsfeld and Cheney decades ago (by circumventing the CIA/NSA and creating their own "intelligence" operations re: Team A and Team B) that there was a giant Red Menace called the Soviet Union that had massive weapons stashed everywhere etc etc was one grand illusion. It was created by various characters to move public policy in a certain direction for multiple reasons.
Even the so called Keynes discipline has been deliberately distorted and abused to create an outcome that satisfied certain individuals and countries. I could go on, but once you start thinking about this subject, you see these false memes everywhere.
Funny you should mention that. The only CFP course I didn't ace was "Investments". Got a B. The whole notion of any sort of standard normal distribution governing investment returns defied my 40 years of [expensive!] education in the financial markets. To be fair, it sort of worked during the rise of our empire (e.g. the period preceding the final harvest) if you tortured the data enough. Your premise of some guiding hand ("intelligent design"?) behind this orthodoxy is not far-fetched in my mind. Remember the ubiquitous nutritional "food pyramid"? Designed by DOA lobbyists. I'll bet this snarky and cynical crew can contribute other examples.
>When I was taking the various courses for my CFP I was amazed how often is was pounded into me that we all act rationally.
and
>One look around can quickly confirm the totally irrational actions of your friends, family and yourself.
How do you know if someone is acting rationally or irrationally?
I guess I am asking you how do you define rational and irational.
Good question because we sort of take for granted what we mean by those terms.
If you're ever read an economics textbook, you'll understand what they mean by "rational". The notion that all news and information is almost instantly disbursed, then absorbed and acted upon by all market participants is absurd beyond belief. The idea that people think carefully about their investments and act rationally when dealing with their money is silly. People are very neurotic when it comes to their money.
My own experience working with my clients shows me that my phone calls go way up during market highs (buy, buy, buy) and market lows (sell, sell, sell) than at any other time. And how many bad relationships have we been in when the "rational" action would have been to get out much sooner than we eventually did, either by dumping or being dumped.
But to your point, it all depends upon what you see or percieve as rational that provides the basis for measurement. In human actions, the majority is often seen as the "right" or "rational" view when so often this proves (usually after the fact) to be a false premise. This is one of the reasons we are manipulated, because our own view of the world is distorted by only by outside forces but from within as well. This is why I always talk about first looking for "truth" within before looking outside.
As Todd Harrison of Minyanville oftens says, where you stand depends on where you sit.
Well, the economic books I moslty read define rationallity as a pure subjective thing (you should know by now which economic books I mainly read) so whether you or I think some behaviour is rational or not is meaningless.
But in the article and in your comments (correct me if wrong) there seems to be the notion of this "objective rationallity", and I keep wondering how can anyone objectively determine rationality.
Because if it is not posible, the fact that anyone (whether is me, you or the most clever psicologist in the world) thinks some behaviour is rational or irrational is quite irrelevant. The fact is that some behaviour happens and economist should study its economic effects, not judge it. Judging is not part of the economic analisys, but part of ethics, politics and so on.
I'm not arguing with you. Nor am I defending the established view. Of course it's subjective. But that didn't stop them (the masters of the economic universe) from defining what rational is and then creating an economic religion around "rational behaviour" to support their thesis. Then all they needed to do was convince the water carriers of the religion (meaning the mainstream economists, financial planners, advisers and money managers) that it was valid, who then spread the faith among the flock and presto this religious economic belief becomes reality.
Anything that depends upon faith and belief for it's basis should, in my opinion, be described as a religion, an article of faith. Of course, a widely held belief is what moves the herd, thus perception and belief becomes reality simply because it's acted upon as if it were true, thus this action makes something "truth", regardless of conflicting evidence. As I've said elsewhere on this thread, the majority often determines what is true or not, what is real or not, at least in the eyes of the majority. Only later is "truth" often discredited, supplanted by a new widely held belief of what truth is.
When you get right down to the nitty gritty, any currency, regardless of what's backing it, be it Gold or Silver or Real Estate, ultimately relies upon our faith and belief. It's just that some currencies are easier to undermine and debase than others.
Agreed.
I would not say currency is based on faith. I think is based on use or force (depending if it is a market money or a government money).
In economic theory, the man who goes after what he wants in the most effective and efficient way that he knows how is called rational. That is the definition of the rational man: He who goes after what he wants in the most effective and efficient way that he knows how. The term rational in this case has nothing to do with sane or logical.
Economic theory posits that men will behave rationally. That is, economic theory posits that men will go after what they want in the most effective and efficient way they can.
It is true that men, more often than not, go after what they want as effectively and efficiently as they know how. But one of the problems with that concept is that some men know how to be more effective and efficient than the rest. Or they have help in being more effective and efficient than the rest. Economic theory overlooks the propensity of men to create as uneven a playing field as possible, so that they benefit while others are put at some disadvantage. Yet if you break this behavior down, you must conclude that the one who creates the uneven playing field is doing exactly as economic theory says he will do: he is behaving rationally; he is going after what he wants in the most effective and efficient way he knows how - by shutting others out.
The fault of the economic theory is the expectation it creates that a mass of men behave rationally. The fact is - by behaving rationally, as defined here, the logical outcome is the few thoroughly dominating the many. That part of the rational man theory is not pointed out in textbooks. Yet that is the state in which we find ourselves today. Exactly as the economic theory of the rational man posits.
http://en.wikipedia.org/wiki/Rational_choice_theory
As an aside to Kathy, I ran across this explanation a short while ago. It seems pretty spot-on to me. Men face a task and make a quick internal calculation as to the likelihood that they can successfully complete the task. If there is a significant likelihood that they won't be able to succeed at the task, they won't even try. Women, on the other hand, will dedicate themselves to the task, even to the point of their own death, in a valient effort to succeed.
Kathy, you must know that men and women think differently. Don't be hard on yourself. It is likely that Cog. Dis's articles are not above your head. It is more likely that they are phrased in a way that you don't understand - they are presented in a way that you don't normally think. If those same ideas were presented to you by a woman who already understood them, and if they were presented to you in keeping with the way you think, I bet you would understand them just fine. But whether man or woman, knowledge builds on knowledge. In order to understand some things, you need to understand other things first. Kind of like, we don't expect first graders to do calculus, for a reason. They have to learn other things about math first. Knowledge builds on knowledge.
Edit: problem is,,,,,, i have no idea how i think, do you? really it isn't very structured at all. like i have said in the past, i wing, how i think. you know, just feel your thinking at the moment. no premeditation thinking. does that make sense? how can you anticipate how your going to react to someone or something that is happening at the moment? i guess you rely on past reactions, WHO KNOWS ALL THIS STUFF, certainly not me. i like what you say, but i don't think any woman telling me anything about my thinking will fly.
G rrrrrrrrrrr E A T .
This is not necesarily true at all. The fact that some guys might be able to get more things or acomplish more goals than others does not mean they are supermans that can control society and slave the rest. You need violence to do that, and usually violence is considered outside the market or economic analysis.
ok have a nice day.
If your value-congruence lasts more than four hours consult your doctor.
Updated GOLD monthly chart:
http://stockmarket618.wordpress.com
Best ever on fooling yourself: Feynman in "Cargo Cult Science" http://calteches.library.caltech.edu/51/2/CargoCult.pdf
ponders whether the next price of a security should = (total shares on issue x previous dealt price + last deal volume @ last traded price) divided by total shares on issue.....
STILL trying desperately to quantify the unquantifiable...
These market technicians, wave magicians and chartists amongst us must be going nuts with frustration...all their signals say that the market MUST collapse, and they've all been saying this since about May 2009 - and what has happened?
Nothing. Up and up, generally.
They are baffled, confused and in total disarray. So much for "market science". Is this "wave 1 of 4 down" or "wave 3 of 3 up" or whatever... Has such-and-such a line crossed over and it means XXX or YYY... Do we have a "head and shoulders" or an "inverted head and shoulders" or a Hindenburg or a "bullish golden cross" or...or...or...
Also, the Fed is in charge now. One little extraneous event, Fed-sponsored or not, and - BAM! - out the window go all the waves, charts, crosses, dojis, candles and bands...
You have to accept risk and front-run the Fed.
The plain fact is: if you are prepared to accept this risk, you enter the casino. EPS, cash flow, debt levels, sales mean less than nothing; it's all about momentum. Guessing the DAILY trend. (Not even weekly, monthly, yearly.)
If you are risk-averse, sitting on the sidelines after 2008's big losses, you will be slowly beggarized by 1.5% returns. At best.
There are still big returns for RISK. And the markets are the place in which everyone should have a portion of their wealth now.
Yeah, and if the FED so much *blinks* the market will unleash such a tide of reversion-to-the-fucking-mean that will even make the HFT fuckers heads spin.
You don't pump up a market without consequences, and those are going to be paid back, with full usury interest, godammit.