As if last week’s (week ending 23 September 2011) turbulence on the world’s stock markets wasn’t enough of an emotional rollercoaster for millions of market participant’s, we will offer only one bit of reflection this morning on the market conditions.
Remember, the markets live, breath and die by the age old human conditions (seven deadly sins) of:
Greed / Avarice (Avaritia)
Therefore, the markets are Harsh, as we have written about before, however markets are still the most open, free and fair way to allocate resources, as we are reaching out to establish with our ‘The Market eQuation’, investigation.
All this activity we hope and trust will lead to a new understanding of the market which we will call:
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The Market eQuation (MeQ):
Today we are commencing our investigation and outreach to discover what we will call the Market Equation.
Basically the idea is to come up with a mathematical equation and rating or ranking system to assess the state and status of various markets.
Whether this will lead to a theory of Markets that can compete with some of the other theories in existence is open to debate.
The basic premise is this:
There should be a methodology to access the Openness and Fairness of any given market versus other comparable markets. This specific ratio or result should therefore determine the individual participant’s level of engagement and commitment to that specific market. The result should also be able to be repeatable over time in order to elicit trends and movements of particular markets relative to each other.
The basic equation can be expressed as MA2R4K2E3T3 = OF outcome (Open & Fair).
OF = (A)2 x (R)4 x (K)2 x (E)3 x (T)3
And derives from the Market Equation Table listed below:
The Market Equation Table
Objective (External) measure
MA2R4K2E3T3 = OF outcome
Therefore: OF = (A)2 x (R)4 x (K)2 x (E)3 x (T)3
Our astute readers might already seen through this equation?
By dropping the M (which will always be 1) the letters that remain result in the word raket. RA(C)KET?
With the additional C, being the complex bit, ultimately the Market Equation becomes a COMPLEX RACKET.