Business

Confusion de Confusiones [1688]

Jose De La Vega, Hermann Kellenbenz · 2022

5 ideas

Never advise others to trade
In speculation, no one sees clearly enough to tell another person whether to buy or sell. Where foresight itself is weak, advice cannot come out well, so giving it only spreads the error and the blame.
Three forces move every price
Share prices rise or fall on three kinds of pressure: news from the distant business the company actually runs, the state of politics around the market, and the market's own opinion of itself. The third means a price can move on mood about the market even when nothing in the real business has changed.
Traders follow the crowd and themselves
Market players copy what others are doing, overrate their own judgment, and act so as to avoid the sting of later regret. These habits, not careful calculation, drive much of the buying and selling.
Markets reward schemes, not just insight
Organised groups of buyers or sellers can band together to push prices up or drive them down for their own profit. Much of what moves a market is deliberate trickery, so an ordinary participant faces deception as well as uncertainty.
Trading becomes betting on itself
Once a market offers options, futures and buying on borrowed money, people can wager on price moves without ever wanting to own the shares. Trade in claims then turns into plain speculation, detached from the business underneath and prone to irrational swings.

Never advise others to trade