Agnosticism: “a person who denies or doubts the possibility of ultimate knowledge insome area of study.”  – 

The above definition is the context in which I will use the word ‘Agnosticism’ in this post. I am by no means, whatsoever, referring to the philosophical, metaphysical or theological implications in which this word is often used.

I believe (which is a tricky word in and of itself), that treating the securities market in terms of being agnostic towards the direction of the future price movement is not just a reasonable and logical viewpoint, but rather, is the only perception that we (as participants) should and can take towards the markets.

No one knows where a stock, commodity, etc. is going, not a single person. Any person that claims they know is literally lying through their teeth (yeah, harsh, but true). To claim that you know the future is like claiming you know the unknowable, it is logically, impossible. To give some context to this massive claim a person is making that says “This stock WILL do ‘XYZ'” just think about the number of shares traded in a day, millions (probably billions total), think about the number of market participants on any given day, millions.

Now, for someone to claim they know the future they would have to:

a) Know exactly how every single one of the market participants interprets the facts (price action, economic data, news, etc.). This is impossible as every single one of us thinks in a different way. I could read the sentence ‘The stock market went down a lot’ to mean “Oh, wow – must have gone down over 500 points.” and another person could interpret the same headline like, “Oh, that’s okay, must mean it went down 25 points.”. See the difference? Each an every one of us has our own interpretation of what we perceive. Each one of us has a different ‘anchor’ that we create relative comparisons to, to derive meaning of what we perceive on a daily basis in the stock market. To sum up, we all (for the most part) receive the same stimuli but when it enters into our cognitive process, the meaning of this stimuli can (and does) differ significantly from one human to another, rendering this possibility 100% illogical. 

b) The people making the claim must have ‘rigged’ the market in some fashion. This task is quite challenging feat considering all the computers, legal and governmental influence that is currently within our capital markets. I cannot say for sure it is impossible to do, but come on, the chances of this taking place are minimal. So small that we can safely come to the conclusion that  the person that is making a claim to where the market is heading has a a astronomically small chance of actually rigging the market in such a way to make their claim true. However, let’s say this DID take place, someone actually did ‘rig’ the market to move in such a way, do you think they would ever share that information with anyone at all? Not at all, never.

As the two premises above discuss, anyone who claims the market is going to move in one way is a) lying and b) a fool for thinking he is that smart.

To tie this all back together, being agnostic towards the market is logically the only stance that can be taken towards the direction of a future move. No one can have knowledge of what the unknown is and once this is accepted, the burden of trying to guess the markets move is relinquished and being a trader is no longer a stressful game of black and white wrong choices. Rather, it is a market is constant gray choices, it is creating a plan for all the moves (up, down, sideways) and respecting the unknown as it so should be. This is the point in which your process comes in. You need a process to plan for the unknown, not guess the unknown. You need a process to react to the unknowable, not know the unknowable.

Agnosticism (in terms of the securities market)