Generally traders, analysts and expert commentators focus purely on numbers when it comes to markets. Rarely do they /really/ look at why they do. Take the news numbers – like consumer sentiment or housing starts… why does anyone care? Well because it gives a glimpse into what people are feeling or doing right?
What if we stopped and asked ourselves the people question first? What if we said, what will different time frame players be feeling/doing today? Next month? What if instead going straight to the numbers we started with the over-arching question we really wanted to know – will someone sell this asset for less in the future if I short it now.
Why bother you might say? Aren’t the numbers enough?
Well no – first of all does any number in the market really have any meaning? Aren’t they all relative to the numbers that came before? So in other words, all market numbers have meaning only in context.
Well that is a funny thing because the latest neuroscience shows that /everything/ we do only has any meaning in context. Particularly when we have to judge uncertainty – which is about all of life except algebra – we use context. We pull data that we aren’t even conscious of ….
What could happen if we consciously set out to put our brain to work in the context that it is really working – predicting other people (theory of mind) and using numbers just a tool – understanding them only as the language being communicated across the electrons?