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Daily Speculations The Web Site of Victor Niederhoffer & Laurel Kenner Dedicated to the scientific method, free markets, deflating ballyhoo, creating value, and laughter; a forum for us to use our meager abilities to make the world of specinvestments a better place. |
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12/06/04
A Philosopher Plays the Stock Market, by James Sogi
Everything constantly changes. The illusion of and desire for
persistence causes internal dissonance. These two ideas are the basis
for many Eastern philosophies. Understanding these two basic conditions
is the beginning of the path to enlightenment. In the markets the
illusion of persistence and denial of change often result in the
buying high or selling low, loss, and the popularity of equity trend
following systems. The beginning of the path to market enlightenment
came to one poor philosopher when he realized that change was the rule;
not persistence. The odds favored reversal on short time frames, and
that any particular short term condition was likely to change rather
than persist. Having come to that realization, as usual quite late in
the cycle, the market promptly turned into a month long trend with
hardly a pullback leaving the impoverished acolyte to meditate quietly
on the nature of things and their tendency to change rather than persist.
The Buddhists study the Eightfold Path as a guide to enlightenment.
Perhaps such a philosophy has lessons for the philosopher who intends to
play the stock market.
WISDOM:
1. Right Understanding: Understand the nature of change and the cause of
unhappiness.
2. Right Thought: Being resolved on renunciation, on freedom from ill will.
VIRTUE:
3. Right Speech: Don't say bad things.
4. Right Action: Do the right thing.
5. Right Livelihood: Don't let your job prevent pursuing other
important things in life.
CONCENTRATION:
6. Right Effort: Activate persistence, exert intent for the maintenance,
non-confusion, increase, plenitude, development, & culmination of
skillful qualities that have arisen: abandon evil, unskillful qualities.
7. Right Mindfulness: Remain focused on mental qualities in & of
themselves -- ardent, aware, & mindful -- put away greed & distress.
8. Right Concentration: Equanimity, mindful & fully aware.