The fifth major Zurich Axiom: On patterns
By John Sage Melbourne
Mayhem is not hazardous until it begins to look organized.
The world of money is one of turmoil and the only patterns are the very same that exist in the froth of the ocean.
This axiom is potentially the most important of all and is the essential to becoming a much better speculator that the most educated and skilled experts.Many get rich authors are selling the impression of order as this is what sells. Any get rich technique can work when you are lucky,and the majority of the stories being sold are not based on a noise,ongoing system that works and can be duplicated. They are sold on the luck that the author has actually experienced. The formula that worked in 2015 is not ensured to work this year.
Minor Axiom V: Be careful the Historian’s Trap
Expect occasion A was followed by occasion B in the past. Next time that occasion A comes around,there is definitely no reason to assume that occasion B is about to follow.The marketplace makes no forecasts of itself and provides no magic formula to predict itself.
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Minor Axiom VI: Be careful the Chartist’s impression
The false premise of the chartist is that he understands that the market can be anticipated if he can just figure out the pattern. The fact is the simplest of all descriptions: the market has no patterns.A part of the chartist’s impression is the pattern line,always drawn in retrospect,which professes to show order in what is basically a random and disorganised time series of prices.Fund managers and sales people utilize this seeming order of pattern,generally upward,as a so called forecast tool. This is just the basis of delusion.
Minor Axiom VIIBeware the Correlation and Causality Deceptions
Over and once again people see domino effect correlations in the share market and even make money on their forecasts. The correlations that they see remain in reality not based on anything besides a passing association or most likely either delusion or luck.The human mind tries to find order in the turmoil,but this order is not offered in the genuine market place.Speculative methodBe careful of seeing order where it does not exist. This does not suggest that you can not find a great bet or an useful investment,but remember that the overwhelming influence of random likelihood. (Gunther does not utilize the term “random likelihood” but instead talks of “luck”).You are always dealing with turmoil and needs to be all set to respond when ever what ever is going to happen,happens.
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