Jan

4

The most powerful kind of love is the love that is not self centered, but goes outward. This kind of love can take many forms such as the love of knowledge, compassion and empathy towards others, the love of nature, love of one's profession and work, or the love of art. In some respects one can love the market as a love of knowledge.

I disagree with the oft used characterization of the market as 'mistress'. That definition embodies and emphasizes more tawdry, baser instincts in the relationship. It is an erroneous anthropomorphication and an unhealthy relationship. Empathy is one of the elements of love. Empathy can be used to understand the herd's motivation to profit in the market. Love enables late nights, long hours and tedious computations. Love is power. Love creates power and that is why it is the greatest of all.

Jeff Watson adds:

I'm so glad that the holiday season has passed, as all of the commercialized sentimentality tends to give me a case of a sour stomach and the need for a strong bromide. Holiday cheer is supposed to allow one to demonstrate love for his fellow man, and a person is supposed to show this love by purchasing as much swag as possible to keep the holiday numbers strong. To all of this, I have to agree with Dickens and say, "Bah Humbug." Not to say that I have anything against love, but love has some psychological components that should be examined. Love has been shown to be a mammalian trait, much like hunger or thirst. Psychologists state that there are different stages of love in an interpersonal basis that include lust, attraction, and attachment. These stages can be overlapping and all involve the chemistry of neurotransmitters in the brain and other endocrine glands. Some theories about this misunderstood phenomenon also state that love is composed of three components that are intimacy, commitment, and passion.

While it is all good that psychologists have done exhaustive studies of love, it is my contention that self delusion is a major component of what we call love. When there is that initial attraction between two people, only the good sides are shown, and one only sees an incomplete picture of what the other person is all about. The mind makes up an idealized model of the other person, ignoring all of the other characteristics that could cause one to change one's mind.

Love happens to be a very irrational concept, although it's  worked since time began. Love has been the subject of writers from Shakespeare and Ovid, to Danielle Steele and a hundred other cheap romance writers. Love happens to be big business, in fact it's a multibillion dollar business. It would be a tough calculation to determine the amount of our GDP, that is a derivative of love.

Love happens to be a very bad thing for speculators or any traders for that matter. When one falls in love with a position, irrationality takes over, and one only sees the idealized position, not the real one. When one loves one side of the market, whether it be bullish or bearish, all other rational arguments fall upon deaf ears. When one loves a particular method of trading… a style, one might not see that the method has become unprofitable before it's too late. Love will keep one going back to the same mistakes, all irrational of course, but that's what happens sometimes. One might fall in love with the Mistress of the Markets, and feel a strong desire to be at her side 24/7, and always have a position on. Spending all of one's time in the market courting the Mistress, carrying a position, can spell financial doom. I'm sure that a hundred different analogies about the detrimental effects of love regarding trading could be listed, and this short list is by no means complete. I will admit that I feel a lot of love in my heart for friends, family, and my country. I will also admit that I've felt love in the markets before and paid very dearly for that love. Since I've gotten older, the best trading lesson I've finally gotten after all these years is the lesson of a dispassionate attitude, not love.

Kim Zussman writes:

A man walks into the market, and asks, "What kinda Gin ya got?"

She replies, "Oxygen, Nitrogen, and Estrogen"

It seems no accident to refer to the market's alluring, seductive, narcotizing, hypnotic, deceptive, convoluted, torturous, capricious, punitive, empty, destructive path as "mistress". Not just any mistress; but that just ripe girl with a perfect body, blemish-less skin, and crystal eyes that smile with love just for you. Until you grow to need it.

How do you dally with her without falling in love? As Jeff says, love is the point beyond which ruin no longer matters. If you can be intent enough to see it coming, can you be strong enough to resist the temptation of heroic sacrifice?

Maybe it takes a good lady's man. Presumably the guy who can take it right to the edge, make her believe, but hold back enough of himself to walk away unscathed at any moment. See Casanova.

Dr. Janice Dorn observes:

J DornIn my experience, one approaches the study of the markets, the long hours, the tedious computations with a sense of passion. People truly fall in love with the study of the markets and the attempt to make sense of them. Perhaps it is the challenge of attempting to understand or explain that which can possibly be understood or explained after the fact — not before.

First Corinthians 13: 1-13 says that — of faith, hope and love — the greatest of these is love.

In the actual trading of the markets, there is no place for faith, hope or love. Markets are not entirely rational and not entirely random. They hold out hope and dash it. They hold out faith and dash it. One can fall in love with the idea of trading until your real money in on the line. Then, the mean markets show themselves and love turns to fear and loathing. Certainly, one can use the concept of empathy to understand the motivation of the herd to profit in the markets. The herd needs empathy because, for the most part, the herd loses.

The markets are neither friendly nor loving. This is a game where some 60 million people compete everyday to take your money before you take theirs. If love is truly a battlefield, there is no better place to find the battle than in the markets.

The markets demand humility, they demand gratitude, they demand that one approaches each day as a loser.

I challenge anyone who actively trades these markets every day to tell me that they are not a demanding mistress, that they are not there to take as much money from as many people as possible or that they are loving and kind. 

Paolo Pezzutti adds:

The relationship between love and passion is interesting. A sane passion helps you reach significant results and objectives. You do not have great objectives if you are not a dreamer, and somehow an irrational component in these endeavors is always involved. Markets are not loving and caring, but you can actually love the way they are structured and twork, and how they surprise investors with sudden and unexpected moves which systematically trap the herd on the wrong side.

You can love the long and patient endeavor to discover hidden inefficiencies and short term behaviors due to specific and repetitive moves of certain participants in the markets. However, love must not be confused with obsession. In this regard, the initial phase of a relationship is characterized by an instantaneous attraction. This phase can be replaced by an anxious and obsessive phase, characterised by an unhealthy attachment possibly overwhelming your life. The final destructive phase may involve extreme feelings of self-blame, anger, and desire to seek revenge. Markets are a fascinating expression of social behavior. The emotional behavior and the ever-changing characteristics and number of participants makes them so complex and quite unpredictable. But the feelings that participants in the markets can have are quite similar to those in a relationship. The post Lady in Sorrento I wrote back in November is about this.


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10 Comments so far

  1. George Parkanyi on January 4, 2009 12:57 pm

    I think where the markets are concerned, for most investors and traders that spend a lot of time on it, it’s the love of the game and not the markets themselves.

    Human beings are torn between the dichotomy of wanting to be part of a community and to have close individual relationships, yet also to compete against other communities and other individuals, sometimes savagely.

    When we ran around with bows and arrows, that need for achievement through competition had us raiding each other’s villages and carrying off the booty (until your village got raided and you lost all your booty and perhaps your life).

    In the markets, we have created for ourselves a rather ingenious proxy to satisfy the need for this behaviour (although unfortunately the wars are still there). We love adventure, we love to see what we can find or accomplish, and although we fear the unknown, we are also drawn to it to see what happens next. In the markets we are engaging a non-linear system that provides all kinds of opportunity for us to test our intellect and our emotions, and that is why we are attracted to it.

    For you that do this professionally, or spend most of your non-day-job waking hours on it, ask yourself “Would I want to be doing anything else?” If your answer is a resounding “no”, then you love the game.

    Human love on the sexual/romantic level is necessary to procreate the species (and the delusion is necessary to overcome the eventual realities - e.g. dealing with a stinking diaper at 3 in the morning in a sleep-deprived stupour), although I believe - not everyone does - that we also have a spiritual dimension that transcends that latter “practical” form of love. The jumping-off point for that is the kind of selfless outward love Jim describes at the beginning of his post.

    That’s not to say a married couple can’t have both, but my observation is that this is rare - much more common is a settling into a comfort zone by both partners that plays out to its conclusion through routine and inertia based on companionship - to greater or lesser degree - rather than passion. Romantic love with a life partner at 60? Almost non-existent I would say. (I could be wrong but I haven’t seen much of it); but it’s probably the way it needs to be with the outward responsibilities older adults take on, particularly where dependents are involved.

  2. Tristram on January 4, 2009 9:43 pm

    To describe the market as a mistress is entirely appropriate if you consider it’s movements day in and day out as a seduction.

    A seduction into that wrong position, the loser. The seduction of hope when you are losing but think things will come back. Seduced through the desire to trade more frequently or in areas for which you have no focus or expertise. The idea that you have conquered the market, that you have won, that you have found the holy grail…seduction; before your inevitable beating. Or the time you feel the need to sell your winners too early because you don’t want to lose, then floating higher seducing a buy at the top. The time you want an outcome and see only the outcome you want as the mistress plays you like a Stratovarious just before extracting your heart and milking it dry.

    And yet in spite of this, we come back again and again, loving her all the more, pursuing her promises of wealth and fame with even more vigor than before. This is not love, it is pursuit. Pure unadulterated pursuit.

    Seduction.

    The mistress is wonderful, and I love the seduction; and through my battle with it, my rage, passion, and satisfaction, I learn more about myself, the mistress and the others who are seduced by her day in and day out.

    So Mistress is in my view is entirely appropriate as a euphemism for the market; and I look forward to her attempt to seduce me tomorrow and the next day. However I will be ready for her this time…I hope.

  3. Gangineni Dhananjhay on January 4, 2009 9:49 pm

    “Love of Markets as Love of Knowledge”. I think this is what this forum exemplifies. Unending quest to better our collective understanding of market machinations. The blurring of lines between love and obsession turning a speculator into a gambler in the heat of the battle is to be guarded against. As Chairman emphasis Goddess of Losses is a terrible temptress.

    As a trader of equities and Derivatives in India my love of markets their micro-structure has led me to this site. Trading&Exchanges by Larry Harris is the starting point for any lover of Markets followed by EdSpec and PracSpec with liberal dose of Dr Brett’s Books and Traderfeed blog. Once a person loves markets with enough intensity followed by proper education, Market teaches you the correct way of betting. Countless speculators benefitted by the concepts of LoBogala,Deception, Camouflage, Ever changing cycles etc. Once the spirit of the trader is elevated and he is on a higher plane able to under stand what i call second and third level fluctuations in prices he is on a natural path to discovering the interrelationships in Markets.
    The profound wisdom in Edspec is such that it always yields different interpretations as you mature on the path of market understanding. Yet it is so simple my Ten year old Daughter Gangineni Hita can resonate with the concepts of LoBogala and recognises Victor and his books in a flash.
    Behavor , Motives and ultimate resolution of the conflict in price becomes a litle more apparent once market microstructure and ecology is studied.Love of the markets grows stronger with surprises in the movements. One can only hope it will not degenerate into revenge as we commonly see in India of violent consequences of unsatisfied love.

  4. vic on January 4, 2009 11:23 pm

    I am overwhelmed by the wisdom of this thread. I vow that I will publish a illustrated booklet with the contributuions of the originators and the commentators and send 25 copies to each. Plse keep this thread going. vic

  5. Jeff Watson on January 4, 2009 11:23 pm

    Gangineni Dhananjhay, you have a very smart daughter. My 20 year old son recently found out who the Chair was when he googled my name and found my posts over here on Daily Speculations. He asked about Victor, and I gave him a copy of both books. He read them, then faithfully returned to his Latin and Greek Studies. In my case, the apple does fall really far from the tree. This is a good thing in my opinion, as the roots of a family should spread far and wide to give it strength.

    Jeff

  6. Gangineni Dhananjhay on January 5, 2009 7:10 am

    Jeff,

    I liked very much your blog ” Master of the Universe” and read many posts thoroughly. Love of the markets manifests itself in the amount of time one spends on the market in non-trading hours. I think children see the world in a clearer way . When I told my daughter about a missed trade today in Metals, her propmt reply was ” No Regrets in Trading Dad”

  7. Craig Bowles on January 5, 2009 7:23 am

    Jesse Livermore said emotions are alright but have to be directed. Hope your gains grow rather than losses reverse. Fear losses growing rather than giving back gains. Also, it takes faith in a system to be able to sit tight.

  8. Gangineni Dhananjhay on January 5, 2009 7:30 am

    Vic,

    The readers of this forum are blessed to receive the wisdom contained in these pages. Truly we are standing on the shoulders of Giants.

    In Indian Mythology a person ” EKALAVYA” living in the forest wants to learn art of Archery. The teacher named ” DRONA” teaches only sons of Kings. Ekalavya approaches Drona who refuses to teach.So Ekalavya practices archery with a portrait of DRONA in the forest and becomes greatest practioner of ARCHERY. Even though we cannot directly interact with you we are all Ekalavya Disciples of this forum and Dr VICTOR

  9. Gary Rogan on January 5, 2009 10:58 pm

    Many things that have been said about love apply to the markets.

    From The Merchant of Venice:

    For I am much ashamed of my exchange:
    But love is blind and lovers cannot see
    The pretty follies that themselves commit;

    Eric Fromm:

    Love is the only sane and satisfactory answer to the problem of human existence.

    Kahlil Gibran:

    Love has no desire but to fulfill itself. To melt and be like a running brook that sings its melody to the night. To wake at dawn with a winged heart and give thanks for another day of loving.

    Proverb:

    Love is a sweet tyranny, because the lover endureth his torments willingly.

    Albert Ellis:

    The art of love… is largely the art of persistence.

    Boethius, The Consolation of Philosophy, A.D. 524:

    Who would give a law to lovers? Love is unto itself a higher law.

    Mignon McLaughlin, The Neurotic’s Notebook, 1960:

    The hardest-learned lesson: that people have only their kind of love to give, not our kind.

    Bill Balance:

    When a man is in love or in debt, someone else has the advantage.

    Rose Franken:

    Anyone can be passionate, but it takes real lovers to be silly.

    Ben Hecht:

    Love is the magician that pulls man out of his own hat.

    Phillip Pulfrey:

    Love is no respecter of age or practicality
    Neither morality: unabashed
    She enters where she will
    Unheeding that her immortal fires
    Burn up human hearts…

    Lord Dewar:

    Love is an ocean of emotions entirely surrounded by expenses.

    Rabindranath Tagore:

    Only in love are unity and duality not in conflict.

    Ursula K. LeGuin:

    Love doesn’t sit there like a stone, it has to be made, like bread; remade all of the time, made new.

    Robert Browning:

    Take away love and our earth is a tomb.

    Tom Masson:

    The love game is never called off on account of darkness.

    Percy Bysshe Shelley:

    Love withers under constraints: its very essence is liberty: it is compatible neither with obedience, jealousy, nor fear: it is there most pure, perfect, and unlimited where its votaries live in confidence, equality and unreserve.

    Fyodor Dostoevski:

    Love in action is a harsh and dreadful thing compared with love in dreams.

    Charles du Bos:

    Love does not care to define and is never in a hurry to do so.

    William Carlos Williams:

    What “love” is I don’t know if it’s not the response of our deepest natures to one another.

    Jareb Teague:

    Love floods us with hope.

  10. R.Sole on January 6, 2009 11:17 pm

    In my opinion some of the negative comments are attacking straw men.

    I love trading, like George Parkanyi because I love the game. So far that doesn’t seem to have harmed me, quite the opposite. I don’t love action, study for its own sake, or particular positions. I strive for perfection in trading, and thus my sole concern is to have on the best positions possible at any given time, and I find that I get closer to this by trying to trade well rather than churn, spout analysis or commentary without placing positions, or sit on horrific losers as account equity goes up in smoke.

    In relationships, I don’t feel I make up an idealized version of someone. Maybe this is why I’ve never married nor have plans to :) In my opinion, only those inexperienced in romance fall for this basic error. As a prevention I recommend seducing at least 2 dozen members of the opposite sex before committing to any kind of serious relationship such as marriage or cohabitation. By this point you will know “love delusions” for what they are - an evolutionary trick designed to tempt you into producing children before it is in your own interest to do so. You’re then more likely to commit for genuine reasons of mutual compatibility and respect, rather than passing hormonal imbalances.

    In trading and love, as in life, experience is the antidote to delusion and falsehood.

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