There's a certain deliciousness in writing reams of prose which in effect say nothing, using words merely to enhance the reader's vision of the scene. This sentiment might seem ridiculous but bear with me for a moment. Just as the richness of light envelopes the human eye to enable it to see, it is through the sheer adaptability of words that a writer can render a scene in a reader's mind. To what end you might ask, is the writer's intention to labour so patiently to fashion an image from words? Surely what is important is for the writer to describe what happens, rather than to write about what is there?
My point is best illustrated by describing the difference between a photograph and a film. A photograph captures that single moment, a slither of time never to be repeated, available to us to replay again and again in a photograph whenever we want. A film does something similar, but with moments of time strung together before eyes. Suddenly, those single moments lose their significance in a film, washed up in a sea of time, sweeping away time in its path.
To truly treasure a moment, we need to recall it. If we fail to recall it, it loses its significance. To enable us to understand what could happen in the future, we need to be able to describe what we observe in the present.
The same is true of markets. A market view is not manifested from a void. It comes about through a careful observation of the present and what it could mean for the future. An inability to describe the present situation in markets in detail and indeed to be aware of the past, makes predicting the future so much more difficult. You could argue that the market did this before the last ECB meeting, somehow misreading the current situation, and thus adjusting expectations to such very stretched levels it would be difficult for Draghi to placate the market, when the ECB meeting actually arrived.
Of course, that ruthless punisher of errors, hindsight can never be beaten: we can but do our best beforehand with the information we have at that point, not after the fact. Yet to do our best, we need to sit back and take a snapshot of situation. We only have ourselves to blame if we misread the situation because we have missed something.
Like my writing? Have a look at my book Trading Thalesians - What the ancient world can teach us about trading today is on Palgrave Macmillan. You can order the book on Amazon. Drop me a message if you're interested in me writing something for you or creating a systematic trading strategy for you! Please also come to our regular finance talks in London, New York, Budapest, Prague, Frankfurt, Zurich & San Francisco - join our Meetup.com group for more details here (Thalesians calendar below)
14 Dec - New York - Yakov Amihud - The Pricing of the Illiquidity Factor's Systematic Risk (Thalesians/IAQF)
14 Dec - London - Matthew Dixon - Machine Learning in Trading (Thalesians Xmas Dinner)
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