Adam Smith's 'The Money Game'

Date25 Aug 2016

CategoriesNASDAQ

If youAAAre wondering why AAAAdam SmithAAA is in quotations, itAAAs because the name is the pseudonym adopted by the author who wrote ” The Money Game ,” a 1967 market classic. In the authorAAAs own words, the book is about AAAimage and reality and identity and anxiety and moneyAAA AAA everything that makes up markets.

Here are some of AAASmithAAAsAAA teachings:

You and I know that one day the orchestra will stop playing, and the wind will rattle through the broken window panes. We are all at a wonderful party, and by the rules of the game we know that at some point in time the Black Horsemen will burst through the great terrace doors to cut down the revelers; those who leave early may be saved, but the music and wines are so seductive that we do not want to leave, but we do ask, AAAWhat time is it? What time is it?AAA Only none of the clocks have any hands.

Successful trading is a game of gauging sentiment in order to discern timing while trying to stand apart from the crowd (no easy feat). The irony is that the AAABlack HorsemenAAA tend to burst through the door the moment party revelers finally stop asking, AAAWhat time is it?AAA

AAAThe market,AAA says Mister Johnson, AAAis like a beautiful woman AAA endlessly fascinating, endlessly complex, always changing, always mystifying. I have been absorbed and immersed since 1924, and I know this is no science. It is an art. Now we have computers and all sorts of statistics, but the market is still the same and understanding the market is still no easier. It is personal intuition, sensing the patterns of behavior. There is always something unknown, undiscerned.AAA

Investors today are even more awash in statistics and data, or what we at Macro Ops call AAAnoise.AAA The game of speculation will always stay the same because itAAAs always changing.

If you are a successful game player, it can be a fascinating, consuming, totally absorbing experience; in fact it has to be. If it is not totally absorbing, you are not likely to be among the most successful because you are competing with those who do find it so absorbing.

These are true words. IAAAm endlessly amused by the droves of traders who spend an hour or two of half-hearted study in the markets each week and expect to produce alpha. If you want to win in this game, you have to go all in on learning and constant evolution. This takes an extreme level of dedication. ThereAAAs no half-assing long-term survival here.

What is it the good managers have? ItAAAs a kind of locked-in concentration, an intuition, a feel, nothing that can be schooled. The first thing you have to know is yourself. A man who knows himself can step outside himself and watch his own reactions like an observer.

AAAThe first thing you have to know is yourself.AAA This is paramount. The greatest traders all possess an unusually high level of

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Adam Smith's 'The Money Game'

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