Being a trader on daily basis (and I am making a distinction between trading and investing) is a great study in public opinion and perception. It also demonstrates to what extent people base their actions on hopes, feelings, delusions, and whatnot, as opposed to sound reason.
At best, we as a species seem to plod along in the dark, the only thing lit being where we’ve been, and we’re somehow able to make decent corrections along the way based on that knowledge. Nobody knows the future, but everyone believes they have an idea of what it will bring, based upon the past. Fortunately, it seems to be an imperfect but certainly useful guide.
The real key to being successful as a trader is to understand the past, know that you cannot predict the future, but also realize that everyone else thinks they can. It’s not so hard to know what people think is going to happen; they’ll tell you. Then you just have to figure out how to profit from them being wrong — which they almost always are.
My favorite trading blogger is a mathematician guy out of New York, Carl Futia. He is, without it even being close, the most accurate forecaster of short-term moves that I have yet come across. And it’s free!
One of today’s entries is a perfect example of why he is so good.