Jul

28

 Between any two occurrences what changes is time. This is true in life other than in markets. For a life in the markets, between penury and wealth what changes is price. Between a well funded account and a margin call, what changes is price. A mere change of time as known in the world will not bring by these changes in a life in the markets. But a change in price will bring these by. So, an equivalent notion of time in markets is then price. It is the connecting thread on which all change propagates.

In this frame of thinking then, measuring progress or regress of one's affair with the markets then against only time is at best half the story or likely less than half. The real story is in measuring things against price. Two stocks both move the same dollar amount over the same time period but one was priced at 100 and the other 200, for example, when you opened the long position. Obviously your capital and you succeeded more with the stock priced at 100.

Now measuring things against price may be more than half the story. Yet, life in the markets has more and immediate refinements. The stock at 100 may move the same amount as the stock at 200 and yet the stock at 100 may waver around a lot more. So not only do we need to measure our enterprise against price but also the likely distribution of prices or the risk undertaken and risk realized.

Time, continues to stick in our brains, being the primordial human instinct. Life in the markets is contested against the primordial instincts of avoiding risk. Market is a place where human beings contest their abilities at claiming better understanding of uncertainty (risk).

Compared to all other forms of human enterprises from the arts, sports, sciences, war, love, cooking, eating, family matters to any thing, the market is a place that requires one to be past one's most basic instinct of time. Of course, who does not time the markets, with some acknowledging it and some not acknowledging the act of timing. Yet, neither the timers nor the self-advertised non-timers are both playing a game that at best is only half as good.

The beauty of the beast called the market then expands to another dimension. You cannot even debate creating time or reversing time. But prices reverse all the time and it is still an ongoing debate if prices can be created. Well some do it most of the time.

With this humble thread of thought, do I get any clues from anyone if the Einsteinian equivalence of time and distance can be modified to include not just the price as holding some equivalence relationship with time, but the distribution of price along with it may fit into some sort of equivalence with price?


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1 Comment so far

  1. Chandrasen Chahar on August 1, 2011 11:11 am

    It is well said TIME is the most important point in STOCK MARKET , though it’s value has everywhere but in CASE OF market it’s degree increases multiple times with RISK factor.
    ……
    ……

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