Sunday, September 19, 2021

The Forest or Trees ... Classical Basic Physics versus Quantum Theory

One part of the human minds strongly believes that the more sophisticated the theory or approach, the more reliable and accurate the methodology. On the other hand, there exist a minority group of traders/investors who on operate on the TREND directions.

This brings me back to evaluate and analyze what I am suppose to do and achieve. The most common pitfall a highly academic qualified person can step into is the path of microscopic analysis missing the macro view completely. I have ventured into this "quantum" path before I manage to reflect on my journey. This "quantum" analysis aka microscopic in layman term see the tree but miss the forest is very real as one get engrossed in QUANTUM approach.

Market is a function of human behavior and this are PRIMITIVE in nature. To use a sophisticated methodology to understand primitive behavior is INCOMPATIBLE and IRRELEVANT. More often it only results in FATALITIES!

Human behavioral instinct or patterns HAVE NOT CHANGED at all. It is always interchange between FEAR, GREED, CONFIDENCE and UNCERTAINTY. This 4 characteristics will control personal behavior, decision and choices.

Back in 1987, Prof Richard Thaler taught Behavioral Decision Theory (BDT) in JGSM, Cornell University before moving on to Chicago University. Finally got his Nobel Prize in 2017 after a long 30 years.

(https://en.wikipedia.org/wiki/Richard_Thaler) 

One of key or essence of his BDT class is above how human mind work alter behavioral decision. Despite the actual existence of human record of thousands of years, the computer age ... and the list goes on ... human behavior has NOT evolve drastically to complement human needs.

This observation only lead me to think deeply about the amount and the type of "knowledge" or "skills" one need to maneuver comfortably is a presumably dangerous/ treacherous risky markets!!!

Over the years growing up as a kid, I have seen small troupe of 3 or 4 males plying their Chinese Kung-fu trades selling medicinal oil displaying their spears and knives skills for a meager pittance amount to make a living. What spectators saw as dangerous and risky is routine daily chores to the troupe.

It took me awhile to replay my early years and how all this relates to the financial markets. 

FEAR can either be an  INHIBITOR or a STIMULANT. How we deal and manage FEAR will ultimately decide the ALTITUDE of our flight.

I do not know if QUANTUM theory is compatible with the primitive market behavior but I can sure that I only use basic Classical Physics applied to my decision making.

         

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