“Market is designed to fool most of the people most of the time” – J.L. Livermore
“If you believe there’s nothing up his sleeve, then nothing is cool” – R.E.M
“The masses have never thirsted after truth. Whoever can supply them with illusions is easily their master; whoever attempts to destroy their illusions is always their victim.” Gustave Le Bon
If you haven’t seen the Matrix film series, we highly recommend it, because we believe it is a powerful metaphor for the market. Lest we leave any doubt in this article, our point is that the market is the Matrix, symbolically speaking. The Matrix is the most elaborate deception ever conceived. Only those who see beyond this deceit will indeed be free to profit from market trading.
The market operates on two levels. Level one is what seems authentic, very much like the Matrix, which is believed by the many.
Level two is what is real, and few recognize this truth – and those few have become masters of the market.
We’ve punctuated this piece with frequent quotations from “The Matrix” series for the sake of illustration. Those quotes are in red capital letters.
MORPHEUS: “I AM TRYING TO FREE YOUR MIND NEO. BUT I CAN ONLY SHOW YOU THE DOOR. YOU ARE THE ONE THAT HAS TO WALK THROUGH IT
Successful trading requires forgetting everything you thought you knew, and everything that seems logical – and appreciating the market for its purity and simplicity. Making that extraordinary leap of faith is not easy; in fact, it’s not even possible for some, precisely because it is so unnatural. The market is not what it appears, and it has but one purpose: to deceive. Its efficiency of intent is a wonder to behold!
MORPHEUS: “THE MATRIX IS A SYSTEM, NEO. THAT SYSTEM IS OUR ENEMY.
When, very early on in my career, a successful veteran trader who had become my mentor stated over lunch one day that “there has been more misinformation written about the stock market in the last 50 years than about any other subject on this planet,” I listened intently. “Because it’s such a popular subject, and half of what’s written is wrong?” I asked. “No,” he replied, “because nearly all of it is superstition and myth.”
MORPHEUS: WHAT IS THE MATRIX? CONTROL. THE MATRIX IS A COMPUTER GENERATED DREAMWORLD BUILT TO KEEP US UNDER CONTROL.
Your job is to look beyond this deception and to FIND the 0.1% that is the truth – those diamonds in the coalfield – and hang on to those gems for dear life.
MORPHEUS: “YOU ARE HERE BECAUSE YOU KNOW SOMETHING. WHAT YOU KNOW, YOU CAN’T EXPLAIN. YOU FELT IT YOUR ENTIRE LIFE. THERE IS SOMETHING WRONG WITH THE WORLD. YOU DON’T KNOW WHAT IT IS, BUT IT’S THERE, LIKE A SPLINTER IN YOUR MIND, DRIVING YOU MAD. IT’S THIS FEELING THAT HAS BROUGHT YOU TO ME. DO YOU KNOW WHAT I AM TALKING ABOUT?”
Could the old man be right, I pondered? How can this be? How could any serious investor base decisions on superstition? Why would people invest real dollars based on myth? Then the answers began to come. It is because they want to believe! Houdini made a career of giving people what they wanted – an illusion that they could believe!
MORPHEUS: “IF THE VIRTUAL REALITY APPARATUS, AS YOU CALLED IT, WAS WIRED TO ALL OF YOUR SENSES AND CONTROLLED THEM COMPLETELY, WOULD YOU BE ABLE TO TELL THE DIFFERENCE BETWEEN THE VIRTUAL WORLD AND THE REAL WORLD?”
NEO: “YOU MIGHT NOT. NO.”
And Houdini was not alone. P.T. Barnum mastered the art of deception, and of course, illusion WAS Andy Kaufman – he succeeded in making people believe that they were seeing things that are far beyond most people’s wildest imagination. Like the market AND the Matrix, he mastered the manipulation of mass perception and belief. I am certain that each would sincerely appreciate the film “The Matrix.” I am sure, too, that each had the instincts to become brilliant traders.
MORPHEUS: “ALL THEY NEEDED TO CONTROL THIS MIND WAS SOMETHING TO OCCUPY OUR MIND. AND THEY BUILT A PRISON OUT OF OUR PAST; WIRED IT TO OUR BRAIN AND TURNED US INTO SLAVES.”
Much later in my life, Michael Stipe of R.E.M. wrote a song about this concept – Man on the Moon – using Andy Kaufman as his example. The words hit home with me in a significant way – as I’m a huge fan of the 20th Century’s greatest hoaxer who was so skillful, incidentally, that to this day, many remained convinced that he had faked his death – and they await his return! Think of it. Illusion so “real” that it became immortal!
NEO: “THIS ISN’T REAL?”