By John Sage Melbourne
Mayhem is not dangerous till it begins to look organized.
Everyone is trying to find the magic formula. It does not exist. The world of money is one of mayhem and the only patterns are the very same that exist in the froth of the ocean. This axiom is possibly the most essential of all and is the essential to ending up being a much better speculator that the most knowledgeable and gifted experts.Many get rich authors are selling the impression of order as this is what offers. Any get rich technique can work when you are lucky,and the majority of the stories being sold are not based on a sound,continuous system that works and can be repeated. They are sold on the luck that the author has experienced. The formula that worked in 2015 is not ensured to work this year.
Minor Axiom V: Beware the Historian’s Trap
About 99% of the population thinks that history repeats itself. History might duplicate itself,but the large majority of the time it does not. Suppose event A was followed by event B in the past. Next time that event A happens,there is definitely no factor to assume that event B is about to follow.The market makes no predictions of itself and provides no magic formula to forecast itself.
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Minor Axiom VI: Beware the Chartist’s impression
The incorrect property of the chartist is that he understands that the marketplace can be predicted if he can just find out the pattern. The truth is the most basic of all explanations: the marketplace has no patterns.A part of the chartist’s impression is the pattern line,always drawn in retrospect,which purports to show order in what is essentially a random and disorganised time series of prices.Fund managers and sales individuals use this appearing order of pattern,typically up,as a so called forecast tool. This is just the basis of delusion.
Minor Axiom VIIBeware the Correlation and Causality Delusions
Over and once again individuals see cause and impact correlations in the share market and even earn money on their predictions. The correlations that they see remain in reality not based on anything besides a passing association or more likely either delusion or luck.The human mind tries to find order in the mayhem,but this order is not available in the genuine market place.Speculative techniqueBeware of seeing order where it does not exist. This does not indicate that you can not find a great bet or an advantageous investment,but bear in mind that the frustrating impact of random possibility. (Gunther does not use the term “random possibility” but instead talks of “luck”).You are always handling mayhem and must be prepared to respond when ever what ever is going to happen,takes place.
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