In my metaphysical dialogues on "what do you want" trader Mike got it:
"I finally got your rock analogy. A rock is only hard, because of my perception and what I've been taught.
So in a sense I'm nobody, not rich, not poor - I'm just the perception of myself. That's mind boggling.......almost scary.
Seems like a circle is formed. So if I'm only my pereception, then what I am I? Does it even matter?"
It does matter. More importantly, what matters is the realization one must have that "what we perceive to be real" is only our perception at that moment.
Here's an example. Close your eyes and think of a red rose. Visualize it. Now open your eyes. Can you remember what you saw? Of course, you can. But, if we were to give you an MRI right that moment, a full brain scan, we would find NO record or direct memory of a "red rose", only electrical impulses, light, and cells. Where is the red rose? Was it not "visualized"?
Religious people will say we do know, and that this is "wrong" thinking. Scientists will say that we only can't see the rose in the MRI because we are not yet advanced enough to see all we should see. Floydians will say that what we saw was consciousness, outside of our brains, and that it was our consciousness (outside of our body and minds) that "created the vision" of the red rose.
All of us are right. Those that believe only "they are right" are the absolutists, and these see "facts" as indisputable, and non corruptible. These are those with limited visions, that cannot believe there can be anything outside of what they believe (doctrines), have been taught (opinion and partial facts), or choose to believe.
Smart traders see beyond "false facts" or "what is" to understand that "what is" is only what you see".
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We hit our lowest lows in 11 years last Thursday. Be sure to be healthy in your anger, but have it. Place blame. Think out what and who caused this, and HOW you were a part of it. Learn from the experience. As an example, 4 years ago Bushy re-elected on "fear of terrorism", and "fighting our mortal enemies, the evil ones" and America fell for it hook, line, and sinker.
Think what would have happened if Gore had become President 8 years ago. What would be different? Would it be better? Worse?
As you blame Wall Street, study health industry companies. How have they done during the 8 year "end of health insurance" of our last administration. Why are drugs cheaper in Canada than the U.S.? Why could we spend trillions in Iraq, and they now want us out, and not created a controlled health care system that does not bankrupt our citizenry and corporations? Why was waterboarding allowed? Why was wiretapping allowed? What did it accomplish?
This is the basic "lack of respect" and questioning of authority that must take place. If the young people in Germany had questioned authority, rather than blindly following their parents, Hitler may not have gained power.
The parallels are in our ability to "believe" and be "led" blindly, and our justification of false facts (such as "even though there were no WMD in Iraq Saddam was evil so it good that we destroyed him". The logic is faulty, but the patriotism makes the logic secondary, and patriotism is a way of thinking, and an emotion.
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By mid December we believe the hedge funds will have cashed out, and they have led this severe decline, cashing out to cover the world cashing out on them. Fear is rampant. We believe another bottom test highly likely, after some upsurge (or vice versa) before market update swings.
And, from Mike Gibbons, at Breakoutwatch.com, who has good perceptions of the market:
The markets rallied strongly on Friday after the news that Tim Geithner would become Treasury Secretary. We can hope that the rally continues into next week as the rest of the Obama economics team is announced. At least Geithner already has an influential job as President of the New York Fed and can therefore have a strong influence on policy makers during the interregnum. Whether or not that influence will be positive remains to be seen. As a member of the Troika (Paulson, Bernanke and Geithner) that have been in charge of managing the fiasco so far I doubt this is change we can believe in. That aside, perception is all important in restoring confidence, so we must hope that the perception in the markets will continue to be that he is someone who can make a positive difference.
Before Friday's rally the markets set a new low and the trend of lower lows and lower highs continues as the markets continue to search for a bottom. A money manager I respect told me "My take is that after the hedge funds are finished their forced selling, hopefully by mid December, the selling pressure will be off and some sideline money will come back into the market." He thinks money will rotate into deep value stocks (but he's a value investor) and the ensuing short squeeze will force hedge funds to cover their shorts providing a massive rally. There is certainly money on the sidelines nervous that it will miss the rapid upswing, and many shorts afraid of being squeezed, as demonstrated by the intraday moves of 10-14% recently. AAII data shows that individual investors have reduced their allocations to stocks to well below the 60% long term mean and when that money comes flooding back we are likely to see many breakouts move rapidly to the upside.
Finally, a bit of insight from the "youth" side of this operation, my 26 year old daughter:
Much of what has been seen in our markets recently was observed first on the internet, economists claim. The 2007 collapse of Ginko Financial, a virtual investment bank located in the online game "Second Life" was primarily due to the unfettered, unregulated capitalism. People opened accounts within this virtual bank, which was claiming the money would earn an astronomical interest rate of more than 40%. Eventually panicked investors began withdrawing their virtual money, at a rate of roughly 250 Linden dollars to one U.S. dollar, yet the bank did not have the reserves to pay up. By the end of the crash, nearly $750,000 in actual U.S. dollars were gone, and players who had legally paid U.S. dollars for their Linden dollars were hit hard. "Second Life" is an interesting version of gaming in which players are actually entrepreneurs who have access to virtual tools with which they can actually create their own products, services, buildings, and more. Supply and demand exists within this virtual world and parallels our own very closely. Certainly, this virtual land is one to watch as it teaches us much about free markets running unregulated.
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