The Only Theory That Will Make You Money in Markets
I am reading Jason Zweig’s Your Brain & Your Money. I am only a few pages in. But one visual already has my attention. It’s about markets “in theory” vs. markets “in practice.” There’s a distinction between the two and I think most of you reading will agree.
Do this, don’t do that. That happens because of this. Follow this signal to get this outcome. The list goes on. There are thousands of theories in financial markets. Probably more. People have been studying markets for a long time. In 1602, the Dutch East India Company issued shares to the general public for the first-time ever. New theories have been dropping ever since. Even Sir Isaac Newton, after nearly going broke trying to trade the Dutch East India Company, puffed out his famous line:
“I can calculate the motions of heavenly bodies, but not the madness of people.” — Newton
Maybe the only theory about markets is there are no theories at all. When given enough time, the markets will expose everything and anything. No single theory is going to guarantee you wealth and success. What matters more is what you will do in practice when your money is on the line. Sitting in an armchair thinking through theories isn’t going to get you very far. You need to be on the field and in the game making decisions when they count.
