If you want to know the truth … Do you? Does anyone? Don’t we all shape the “truth” to fit our view of the world, our view of ourselves, our view of the choices we make, and if someone else’s truth conflicts with that, well, it just ain’t true, now is it?
I am in a philosophical mood today. Frankly, the market is boring me again with its inability to collect itself and settle down and my mind is wandering, wandering to this idea of truth. In the market, there is plenty of “truth,” right? On any given day, two highly respected analysts espousing their “truth” can be 180 degrees apart. Is each shaping their truth to fit their view of the market and does each look at the other’s “truth” and deny it?
Perhaps my meandering into the world of philosophical truth means little in terms of learning how to make money in the market. Then again, maybe it does have meaning. Maybe, the idea of truth is the most important lesson one can learn about playing the market. Now that I think about it, it just might be the most important “truth” about playing the market. If does not know how to find truth in the market, or one simply accepts the truth of others, the outcome might not be good.
One has to learn what truth is relative to the market, and one has to learn how to find truth in the market, and, finally, perhaps most importantly of all, one has to be faithful to the truth they discover (until one knows a thing is no longer true).
Truth relative to the market is about facts, analysis, and conclusion. Facts are the basis of truth. Analysis is the formation of truth, and conclusion is truth. What you come to believe about a market, if it is based on fact, analyzing fact, and then drawing conclusions from that analysis is true. It is what then we believe; it is what we then act upon.
Now, here is the kicker, and it is a lesson that applies to Life as well as the market – just because something is true does not make it right. We might analyze a market or a stock to perfection, believe it will go the way of our “truth,”, make the play, and then what we believe would happen does not. Thus, our conclusion, the truth we relied upon to make the trade was not right. Does this then, the fact that we lost on the trade, make our conclusion untrue?
Of course it does not make our conclusion untrue. It simply means the market did not go our way. The trade itself, given all the facts and the analysis around the facts, is true. So, what does this mean, what is the lesson here?
The lesson is this: doing your homework will give you the best chance of finding the truth about a trade. It might not go your way when you first make the trade, but it might well go your way the next time, and the next time after that.
Remember, successful trades often are not about your “truth” because the “truth” for the market on any given day may differ from yours. Persevere if you believe in your truth and, more than likely, it will pay off for you.
Here is a simple example to elucidate my meandering today.
In the factual chart above (source EIA: US Energy Information Agency), crude oil supply has clearly increased in the last four years and it looks to increase even more in the next two. Natural gas production has clearly increased as well, and it looks to continue on that path.
Consumption of liquid fuels (gas and oil) have declined and flattened out. Consumption of natural gas has increased, as has renewable and total energy consumption. My simple “truth?” The shift to alternative energies is in full swing and there is money to be made in trades that support natural gas and renewable energy sources. I believe in this, and so I will stick with my plan, even if it means that currently the market is seeing another truth, one different from mine.
- Euro zone businesses had a solid start to the second quarter of the year with activity picking up at its fastest pace in almost three years, surveys showed on Tuesday, suggesting a broad-based recovery is taking hold in the bloc.
- While Germany continued to lead the upturn, businesses in Spain and Ireland grew at their fastest pace since before the financial crisis.
In time, the market will come around. I just need to be patient and faithful to my truth.
Trade in the day; invest in your life …
