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The Stock Market Is An "Attractive Nuisance" And Should Be Closed

  
Analysis, Education
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Submitted by Charles Hugh Smith from Of Two Minds

The Stock Market Is An “Attractive Nuisance” And Should Be Closed

The dark pool of parasitic scum known as the stock market is an “attractive nuisance” that should be shut down.

In tort law, an attractive nuisance is any potentially hazardous object or condition that is likely to attract the naive and unwary, i.e. children.

A classic example is an abandoned swimming pool half-filled with fetid water.

Since many stock market investors are demonstrably naive about the risks and unwary of the dangers posed by the stock market (the proof of this is that they remain invested in the market), it is but a slight extrapolation of the attractive nuisance doctrine to declare the stock market is clearly an “attractive nuisance” and should be closed immediately.

Is this really a legal stretch? Consider the conditions that characterize an attractive nuisance. I have edited these to pertain to the stock market and investors:

1. The market is one in which the Powers That Be (the exchanges, the Central State, the central bank, et al., the effective “owners” of the stock market) know or have reason to know that brainwashed or ill-informed investors are likely to risk their money in.

2. The market is one of which the Powers That Be know or have reason to know (and fully realize or should realize) will involve an unreasonable risk of financial loss or ruin to such investors.

3. The investors, because of their consumption of officially sanctioned propaganda and misrepresentation of market risk and return, do not discover or realize the risk involved in placing money in the stock market. (more…)

Artificial Intelligence, Chess, and the Stock Market

  
  Education
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In 1997 chess grandmaster Gary Kasparov met the Singularity. And the Singularity won.

In 1985 Kasparov easily beat a chess-playing computer, even though he resorted to a trick to out-Kasparov the machine’s Kasparov program. Eleven years later, though, the chess legend struggled with Deep Blue, a computer with even more powerful processing power. But even Kasparov couldn’t compete with Deep Blue once its development team doubled the processing power a few years later.

Kasparov was beat, but he drew new lessons from the run-in that he details in New York Review of Books. These lessons might help you become a smarter–and less anxious–trader.
According to Kasparov, the exponential gain in technology didn’t ruin the game; it actually had some surprising aftershocks. 

First, the game became more global. With access to computer programs that could train students available anywhere and everywhere, students far from the chess epicenter of Russia began to crop up.

Kasparov says:

“With the introduction of super-powerful software it became possible for a youngster to have a top- level opponent at home instead of need ing a professional trainer from an early age. Countries with little by way of chess tradition and few available coaches can now produce prodigies.” (more…)

Four Poisons

  
  Education
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There is a Korean martial art called Kum Do. This is a brutal game that involves a fight to the death with very sharp swords. The way it is practiced today is with bamboo sticks, but the moves are the same. Kum Do teaches the student warriors to avoid what are called “The Four Poisons of the Mind.” These are: fear, confusion, hesitation and surprise. In Kum Do, the student must be constantly on guard to never anticipate the next move of the opponent. Likewise, the student must never allow his natural tendencies for prediction to get the better of him. Having a preconceived bias of what the markets or the opponents will do can lead to momentary confusion and—in the case of Kum Do—to death. A single blow in Kum Do can be lethal, and is the final cut, since the object is to kill the opponent. One blow—>death—>game over.

Instead of predicting, anticipating, and being in fear and confusion, you must do exactly the opposite if you are to survive a death blow from the market movements. You must watch with a calm, clear and collected attitude and strike at the right time. A few seconds of anticipation, hesitation or confusion can mean the difference between life and death in Kum Do—and wins or losses in the stock markets. If you are not in tune with the four poisons of fear, confusion, hesitation or surprise in the markets, you are at risk for ruin. Ruin means that your money is gone and the game is over.

How can you avoid the four poisons of the trading mind: fear, confusion, hesitation and surprise?

Replace fear with faith—faith in your trading model and trading plan

Replace confusion with the attitude of being comfortable with uncertainty

Replace hesitation with decisive action

Replace surprise with taking nothing for granted and preparing yourself for anything.

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