Albert Einstein told us the most important question facing humanity is “Is the universe a friendly place?”
He knew ahead of time that the answer was “yes”, because when you look at the regularity of the great cycles and movements of heavenly bodies as a backdrop to human evolution it is obvious that the universe has provided mankind with the perfect environment to grow and prosper.
Einstein concluded that we must use scientific discovery and our natural resources to create tools and models for understanding the universe, rather than wasting our physical and mental resources on defending ourselves from it, because as the great scientist said, “power and safety will come through understanding its workings and its motives”.
As traders we need to ask the same question of the markets. “Are the markets a friendly place?”
When we look at markets from their mercenary beginnings to the agriculture revolution to the industrial revolution up to the technology boom there is little doubt that the evolution of commerce, i.e.: modern markets, have benefited humanity greatly by keeping the cost of food and energy affordable and the cost of securities, i.e. savings and retirement investments, relatively high.
When you look at the most powerful pricing determinants: demographics, the policies of elected governments, and economics, we start to recognize that these influences are to a trader and investor what energy, matter, and gravity are to a physicist. As the earth relies on the cycles of the sun and solar system we rely on the patterns created by our own population and governments.
To answer the question, yes, the markets are humanity friendly. And the higher power that guides them is our collective conscious. Just has Einstein pointed out the universe was a friendly place, and neither dangerous or random, with his famous quote: “God does not play dice with the universe”, we need to realize that the expansions and lesser contractions created by collective commerce are not something to fear but something to rely on and learn from. That is the most valuable app in history. We are, collectively, the higher power. To paraphrase Winston Churchill, “after exhausting all other possibilities [we} always do the right thing”.
The take-away from this for traders is to stop trying to figure out what will happen next with markets and go along with what is happening now. Too many investors waste time and brain power on focusing on how to time the next market collapse, or how to profit from some coming calamity because of a fearful mindset, and miss out on the opportunities provided by current bull and bear markets. Warren Buffet summarized this point perfectly when he said, “Our approach is very much profiting from lack of change rather than from change”.
The bottom line, don’t bet against human progress and trust that the sun will rise again tomorrow.
