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I thought about your comments and think,
1. The markets are not as chaotic as you make them out to be. They appear chaotic as so many non-linear variables appear, yet lack the same value as they appear to, eg, how do you determine thevalue of a NY Times article saying Bush is an idiot? You dont. You let others, namely the market, do it for you. If the market discounts the article so do you. But many traders think, individually, their opinion counts, so they take a position and lose money. Then blame the market for being irrational, when, the trader acted irrationally.
2. As markets are composed of people, cycles and psychology take hold. You need to determine the markets mood before acting. No one likes to talk about psycho-babble, but considerthe impactnews has on us. I think Punch magazine 20 years ago, highlighted this by asking what do you talk about AND for how long. Their casual research determined that a landslide in India killing 1,000 was equal to a snowstrom in Belgium trapping 50 people in their hotel, which was equal to local traffic and is not as important news as the kid next door who broke his arm playing soccer.
Interesting topic with no real answer.
I thought about your comments and think,
1. The markets are not as chaotic as you make them out to be. They appear chaotic as so many non-linear variables appear, yet lack the same value as they appear to, eg, how do you determine thevalue of a NY Times article saying Bush is an idiot? You dont. You let others, namely the market, do it for you. If the market discounts the article so do you. But many traders think, individually, their opinion counts, so they take a position and lose money. Then blame the market for being irrational, when, the trader acted irrationally.
2. As markets are composed of people, cycles and psychology take hold. You need to determine the markets mood before acting. No one likes to talk about psycho-babble, but considerthe impactnews has on us. I think Punch magazine 20 years ago, highlighted this by asking what do you talk about AND for how long. Their casual research determined that a landslide in India killing 1,000 was equal to a snowstrom in Belgium trapping 50 people in their hotel, which was equal to local traffic and is not as important news as the kid next door who broke his arm playing soccer.
Interesting topic with no real answer.
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