By John Sage Melbourne

Chaos is not unsafe until it begins to look organized.

Everyone is searching for the magic formula. Unfortunately it does not exist. The world of money is one of mayhem and the only patterns are the very same that exist in the froth of the ocean. This axiom is potentially the most crucial of all and is the essential to becoming a much better speculator that the most educated and talented experts.Many get rich authors are selling the illusion of order as this is what sells. Any get rich approach can work when you are lucky,and most of the stories being sold are not based on a noise,continuous system that works and can be repeated.

Minor Axiom V: Beware the Historian’s Trap

Expect occasion A was followed by occasion B in the past. Next time that occasion A comes around,there is absolutely no reason to presume that occasion B is about to follow.The market makes no forecasts of itself and offers no magic formula to predict itself.

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Minor Axiom VI: Beware the Chartist’s illusion

The incorrect facility of the chartist is that he knows that the marketplace can be forecasted if he can just determine the pattern. The reality is the easiest of all descriptions: the marketplace has no patterns.A part of the chartist’s illusion is the trend line,constantly drawn in retrospection,which professes to reveal order in what is essentially a random and disorganised time series of prices.Fund managers and sales individuals use this appearing order of trend,typically up,as a so called projection tool. This is just the basis of misconception.

Minor Axiom VIIBeware the Correlation and Causality Delusions

Over and once again individuals see cause and effect connections in the share market and even generate income on their forecasts. The connections that they see are in fact not based on anything aside from a passing association or most likely either misconception or luck.The human mind searches for order in the mayhem,however this order is not readily available in the real market place.Speculative methodBeware of seeing order where it does not exist. This does not indicate that you can not discover a great bet or an advantageous investment,however remember that the frustrating influence of random likelihood. (Gunther does not use the term “random likelihood” however instead talks of “luck”).You are constantly handling mayhem and needs to be ready to respond when ever what ever is going to take place,happens.

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