The picture above gives you a much better idea of how the stock market works in multi-dimensional space. Although we are still restricted by trying to illustrate it in a 3-D environment.
Human beings are fairly simplistic animals. We tend to take today’s environment and perpetuate it well into the future. Allow me give you two quick examples to drive the point home.
- 6 Year Bull Market – most investors assume that it will continue for the foreseeable future.
- The market has been stuck in a tight trading range over the last 10 months –Goldman: Market’s going nowhere for a year My question is, where was Goldman Sachs predicting this 10 months ago?
This sort of a linear thinking doesn’t work and that is precisely why most investors get into trouble. Nature doesn’t work in such a simple fashion. Everything in nature, including our cells, oscillate at a certain rate of vibration. In other words, the stock market will top out and reverse at a predetermined mathematical point of force. NOT when most people expect it to.
