Quantum Ripple

~ Random thoughts on financial market chatter

Quantum Ripple

Tag Archives: esoteric

Markets Intertwined

25 Saturday Jul 2015

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economics, esoteric, investing philosophy, Investment

Suspecting that markets are a combination of factors involving psychology,sociology,statistics,economic theories,quantum physics- & yes the pure fundamentals and technical followers; the underling nature in many ways reflects the true tangibility of reality. I have often tried to frugally translate some of these concepts into logic pertaining to markets such as in the Uncertainty post

With that said, in the last 5 months I have been blessed in many ways to dive deeper into these general concepts & while I have come across people who inadvertently believe that their unique strategy is the way to understanding markets- I fail to comprehend. But with that mentioned, I also believe there is an element of truth in what they have to say; it’s just not the complete story.

Ultimately, the goal is not ” merely to ponder” but translating this information into actionable decision making processes to participate in markets. This is where modern economic theories taught at university level has got me gob-struck…right from the efficient market hypotheses to those based on pure historical extrapolation. Many if not all of these economic schools of thought are completely contrary to those practiced by major market players.

The more I listen, read about and observe some of these major market participants- the more disconnect I am exposed to with respect to the retail investor. With the exception of one or maybe two individuals known to me, I yet haven’t come across a money manager/individual whose mental frequency is aligned towards that of a major player. What I do come across is many “Fake it till you make it types” (not that there is anything wrong with this; within limits) with a completely out of balance ego quotient.

Never-the-less, one of the more rarely heard about economic theory which has sparked my interest is that of Fallibility, Reflexivity and the Human Uncertainty Principle (ironically, has a link to the Heisenberg’s uncertainty principle as posted in one of my previous posts)

Fallibility refers to the tenancy of humans to generalize and in many ways structure thing around us to create a set of rules and assumptions based on which there is an expected outcome.The mere act of us trying to understand markets could be considered as a case of acute Fallibility.

Reflexivity on the other hand requires a continuously thinking loop of sequences in the present.This is further complex-ed  by thinking mechanisms that are purely objective (Efficient market hypothesis as example) and those that are designed to be manipulative (Quantitative easing as example); influencing the objective outcome. Reflexivity is subjected to Fallibility and vice-verse.

The Human Uncertainty Principle is a mush of both Fallibility and Reflexivity as we experience it in the now.

Financial markets are a epitome of the Human Uncertainty Principle which unfortunately in futuristic states does not validate the laws of statistics and probability with complete accuracy as expected theoretically (quantum physics like??) This leaves the investor/market participant in a constant state of uncertainty depending upon the outcome of this tug-of-war between Reflexivity and Fallibility.

In other words, the investor has not only to deal with quantifiable risks (the statistics and probabilities associated) but more importantly human uncertainty- which precedes data that is later quantified to draw logical (so called) conclusions.

I hope, I am doing justice in translating my understanding of this principle which forms the basic tenant of a certain gentleman who is known for his famous single day profit of US $1 Billion on September 16th 1992 (you know who I’m talking about).

Economics seeks to be a science. Science is supposed to be objective and it is difficult to be scientific when the subject matter, the participant in the economic process, lacks objectivity—G.Soros

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Ponderings

27 Saturday Jun 2015

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esoteric, investing philosophy, markets

Golden Words: 1, 2, 3…what comes next?

Responder:4

Golden Words: Not so fast, could be 3.The best predictor of tomorrow is always today.

Responder:Ok…

Golden Words: Not so fast could be 2…because things have this terrible tendency to revert back to their mean.

Responder: Ok…

Golden Words: Not so fast. Could be 1 because in the end what goes around comes around.

***Words by Larry Summers***

Too much on my mind

23 Saturday May 2015

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algorithim, esoteric, markets, Systematic Trading, trading, trading psychology

The past weekday has seen a fair bit on my mind. I shall attempt to condense all of it (while keeping some out) in a single blog post.

To begin with the BBY saga– At a personal level I believe that ASIC has failed in it’s role as a regulator considering that in 2005 ASIC placed doubts on BBY’s quality of research. That should have been “bells ringing” to keep a closer eye on the business. Not just slap a fine and move on.It’s been 10 years now & look what we have! I wouldn’t be surprised if there are more, similar fails due in the Australian brokerage business. The question is, whose next? Sadly, the client always gets sc***ed.

Master Chef and Trading: One of my hobbies that allows me to explore my creative side is cooking. Without need to mention, I do watch the reality television show- Master Chef (Australia). I like to look at the philosophy behind any activity that enables an individual to bring about the best in them. One such chef who I believe has a quality philosophy is Marco Pierre White. In one of the more recent episodes he mentioned a phrase to the contestants which resonated very strongly with trading and investments & I quote, ” Consistency comes from Simplicity”. This is a vital feature, especially if one is transforming from discretionary trading to something more systematic. I also believe, this is where a systematic approach to trading has an edge with respect to the discretionary approach.

Pen down your thoughts: It is unfortunate how our thoughts during the day go ignored and left aside. Some of these thoughts may be genuine ideas, utopian or even negative. Over the last few months, I have taken a page from one of my online mentors ( as I like to call ) and begun penning down my thoughts in words. You will be amazed how clarity sets in regarding a situation once you pen things down. It may not be obvious but the subconscious does not deal with the objectively obvious. This is also where, a trading journal is of vital importance.

Stuck In Traffic

10 Sunday May 2015

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esoteric, Self-observation

Beginning this post with a song that sums my thoughts at times. Sing along!!

This Saturday saw me driving a fair distance and an hour long journey took a good two and a half hours due to roadwork.

It seemed like every route I took ended up with road work.LOL

Finally after I reached my destination I realized that at the start of my journey, I had taken a different route (to the regular) and after beating around the bush with traffic ended up taking the original route.

Anyways, when-so-ever I am stuck in traffic I see it as an opportunity to test my patience and observe my erratic attitude with respect to other drivers on the road. It more than often surprises me how a significantly tolerant person like myself ( I hope to think so) can often become impulsive and agitated.

Perhaps, I am in a “conscious incompetence stage” with my driving attitude. Definitely something to work on.

Investing & Trading lessons from Hollywood

11 Sunday Jan 2015

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esoteric, markets, movies, trading psychology

I am a picky person when it comes to watching movies. So when I have someone ask me about the latest movie I have seen…my answer is normally a blank stare.

More recently a movie which I could mentally co-relate to financial markets is The Imitation Game. No, this post is not about The Imitation Game but rather about a movie that I hold close to my heart; as containing valuable lessons in trading/investing. The movie- “Revolver”(click).

The reader can figure out the plot of the movie and I’ll jump to the key aspects which I find simulating. While the movie is filled with quotes and indirect inclinations to the sublime, it clearly distinguishes between the rules of the game (viz markets, life) as being twofold. One set of rules governing the physical word and another governing the internal world or psychological/para-psychological word of an individual.

Rules pertaining to the physical world (markets)

  • “The only way to get smarter is by playing a smarter opponent.” —Fundamentals of Chess 1883

It is easy to become compliant when a system or strategy is working…and working well. This complacency can often result in stagnation. Evolution is a state where change is continuous and since markets are in a continuous state of expression; it is our utmost responsibility to constantly lookout for a smarter route (to profit). For every loss an investor/trader makes is a resultant of a smarter player profiteering.

  • “First rule of business, protect your investment.”                                    —Etiquette of the Banker 1775

I’m sure most of you have heard this numerous times. But the discipline to practice this is what sets the chaff apart from the grain. I wouldn’t doubt that even the best of the best in risk management have caved into this trap some time or the other. When I place a trade, I always look at how much I can lose rather than how much I can make. This is a difficult mindset to train yourself into…but give it a go and you will promise yourself a positive change in your decision making capabilities. The importance of this rule is reiterated in the movie through the aphorism- “In every game and con there’s always an opponent, and there’s always a victim. The trick is to know when you’re the latter, so you can become the former.” i.e become a good loser rather than a big loser.

Rule pertaining to the the psychological/para-psychological world (markets)

  • “The greatest enemy will hide in the last place you would ever look.”        —Julius Caesar 75 BC

Where is the last place an enemy can hide? A place where you would never look. It’s in the mind!  Along this journey of trading and investing, I have realized the mind plays a vital role in determining a profitable outlook. We all recall those moments when we have a gut feeling (different from intuition…an intuition is void of emotion. It just is ) that made us that lucky profit and then the very next moment the very same gut feeling deserting you with a loss. Why? Now, a solution to this is (or probably is) different to every individual. All I can suggest is beginning with the study of your ego to attain the grace of intuition. The solution as per the movie is to “use your perceived  enemy to destroy your real enemy”.

There are more antidotes in the movie but the above stand out to me. As for the rest…Go figure it out by watching the movie!

About this blog

Philip D'Souza

Philip D'Souza

While the blog is about financial markets, it will draw inspiration from various topics that may co-relate, compare or mirror financial markets. My philosophy of trading and investment is that markets cannot be studied from a fundamental, technical, economic,political, statistical or any other "one point of view". The best decisions are recognized and made as a result of a combination of factors. These factors may include the commonly known financial jargon to the less looked upon sublime and psychological reasoning of capital markets. So sit back and enjoy.Your constructive feedback is welcome. PS: There is NO financial recommendation being made on Quantum Ripple. But let those who have ears listen and eyes see- to draw their own conclusion.

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