By Bill Cara –
The market is the theatre of life where the play is all about time and money. If investing represents our journey and trading mirrors the paths we take, then the market is the big show, the place all of us experience it.
Anything you read from the Trader Wizard will echo the following insightful words of Charles Dow.
Mr. Dow is someone who understood that the market is all about life, and nothing more. At the turn of the century, he said: “The man who is prudent and careful in carrying on a store, factory or real estate business seems to think that totally different methods should be employed in dealing with stocks. Nothing is further from the truth.”
Charles Dow is also the father of the Dow Theory, which is a market technician’s bible, seemingly at odds with the man’s fundamentalist advice.
But that is the market, not always what it appears to be.
After I finished writing this book, I returned to the question, what is the market? And then I wrote an answer.
The market is the theatre where capital is created, transferred and destroyed. In that theatre, where all participants must go to trade in capital, the market represents the sum of the experiences of its individual participants.
The buyers and sellers, the bidders and offer ors, are the actors, the players, who make the market what it is. The rest is merely noise.
Ultimately, the more time and experience individuals have in this theatre, the more understanding they have of it and the less patience for others who create the random noise, who would use it to distract the actors.
And so much is written about this thespian drama. Much of it, simply wrong or misleading, which adds to the distraction.
The market is now all about marketing. It’s about people trying to sell you something, or do something for you. But, here is the key. You are not part of the audience; you are one of the actors.
There are some things in life, you just have to do yourself, for yourself. Investing in the market is one of those things.
The market is about life, and you need to live it, not be taken through it.
So, Wall Street mostly represents sales, which is what we call the sell-side. And, in the words of my Dad, “Why would you ever go to a salesman to ask him what you need?”
For a new investor, should you venture forth on your own, the market will become the crucible of your personality as you struggle to adapt to your earlier perceptions of it.
If you have a conservative side, you will tend to see the danger in it. If you are an enterprising sort, you will see mostly the lack of creativity of traditionalists. If you are speculative, you will see that most investors are predictably inactive.
In many respects, the market theatre is like a war theatre. At the end of the day, you will either be a survivor or you will not, but one thing is for sure, if you do get involved, it will shape and define your personality, your character.
As you mature as an investor, you will, for certain, better understand who you are as just one person among the six billion of us on this earth.
You will eventually discover that the market, as complex as it might have seemed at the outset, is merely a case of “people acting like people” — people like you and me — with all our fears, enthusiasms, prejudices, stupidity and wisdom. That, in a nutshell, is the essence of the market.
As we all do, the market changes its face by the moment. But, don’t let that confuse you. The market is us.
As the market is space we all occupy in our lives, then investing cannot be rocket science. It is just life itself.
As in life, attaining investing success in the market should not be a mystery. Yes, there is plenty of mystique in capital markets, but investing, or trading — which is a subset of investing — has forever been a business of common sense, intuition, faith, courage, knowledge, patience and luck. Just like Charles Dow said 100 years ago.
Source: Trader Wizard Capital Markets Guide
Photo credit: Scott Beale via Visual Hunt / CC BY-NC-ND
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