Sunday, May 16, 2010
All good things must come to an end ... or perhaps a new beginning.
Fractal-based theories of market behavior explain discontinuous movements such as the May Trix Flash Crash.
As opposed to supposing that the bubbles in your portfolio are as random as the bubbles in your soda pop, a fractal approach concedes that bubbles are a certainty.
'Fundamentals' most certainly do matter although the use of the term is not what the conventional wisdom perceives.
Even a cursory examination of modern financial history would seem to consign the squawk of randomwalk to the febrile dustbin of history and yet the arrogance of unlimited self-determinism and the mastery of man above all motivates adherence to the ex-theory.
Like lemmings herded to discontinuous chasm after chasm, markets move in memoriam much to the prevailing wisdom's opprobrium.
For your humble blogger Mandelbrot was an eye-opener, but John Needham was the closer.
Over the last week I have automated a spreadsheet based on a 'fractal' theory where upon entering high, low, open, and close as well as ONE other indicator (proprietary from Needham), buy and sell orders can be triggered in ALL liquid markets, and quite successfully I might add.
Applying what Mr. Needham has taught in 'face-to-face' sessions and postulating as to what he will unveil in his foreshadowed 'next stages', have on this fella's spreadsheet clearly, and empirically, separated the winners from the 'sinners'.
Stunning, brilliant, simple, elegant, and in direct opposition to most every financial model known to man.
Now, gentle reader, you might ask why not publicise it Mr. Money, become rich and famous, dye your eyebrows and hair black, and become a billionaire, or at least write a book?
Well, the humble reply is as follows: 1) the entries in this blog do publicize it and have directed folks to Mr. Needham's website thedanielcode.com, however to truly appreciate his teachings one must attend a tutorial and he is coming to the States this summer ; 2) fame is way, way, overrated and I've already made enough coin for both myself and my children to be comfortable; 3) I've earned my grey hair thank you very much; 4) money is the root of all evil and should be treated with respect much like a weapon and a drug, it is so very hard to make abundance in in this world and not at the end of the day be a complete a&$%ole and 5) all I care about is feeding the kids, and from time to time the extended family, feeding a book would be torture.
And yet this is damn entertaining, and sharing, albeit anonymously, is caring.
The purpose of this blog was in part to figure it 'out', believing' it' to be 'it', with the understanding that it was much easier to make 'it' than to invest 'it'.
Now that I'm firmly ensconced into a future where I'm in 'it' to mint 'it' , the purpose of this blog is called into question.
So...will ponder that. Thoughts for now are that future entries may be limited, if any, and that the future focus will, predominantly, be on the premise that according to fractal theory 'self-similarity occurs on all scales' as well as an exploration of the more subtle concept of self-affinity which refers to a fractal whose pieces are scaled by different amounts in the x- and y-directions.
All good things must come to an end ...or perhaps a new beginning.
There is a difference between knowing the path and walking the path.
To be mindful is a discontinuous process, our senses allow us a glimpse at the perfect form (truth) but that view can often be distorted by the flickering fire of perception that illuminates the shapes we perceive to believe.