Why Do You Need To Know Why?

LONGSTREET: Very simply, I had a book for everything — a book for corn, a book for wheat. I assigned an analyst to one or a couple of books. They were instructed to look for pattern similarities — analogue years — and try to establish a cause-effect relationship in fundamentals and price movement. As things would develop in a market, each individual would write down his ideas about what happened during that day in the specific commodity he was in charge of. It thought that the information gathered would help me today.

I ended up realizing that this approach only got a lot of junk. People who write about markets are simply doing that which is necessary to keep their jobs. Whenever there was a movement in the market, it was necessary for the analyst to feel that he knew why it occurred. Usually, what they said was worthless.

IM: The correct answer to the question, “Why did the market fall?” is simply that there was more selling that buying.

LONGSTREET: Right. Why there was more selling than buying can be known, but it is often not important. I’m one of those than doesn’t know all the reasons why there was more selling than buying. But the difference between myself and the next trader is that I know I don’t know. Most other people believe that they know.

IM: So you have no problem entering a market when you know you don’t know the reason behind the move?

LONGSTREET: Ah! I know that I can know something. I know that the market moved, and I know that the increased buying was caused by something. I may have an idea but I don’t know if it’s the correct reason.

But I can know that so long as my interest is truth and truth alone, and that I persevere in my search for truth, some parts of the truth will come through. Thus, I need not necessarily know the reason behind the market’s behavior in order to profit from it. That’s been proven over the years.

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