10 July 2012

About Stock Investment: (Unknown*Uncertainty)^(Conflict of interest) = Mission impossible.

If we can succeed in stock market investment by simply "monitoring" the price and the volume plus some sort of "insiders' news or tips", then the probability to succed in stock market investment via this approach is proportional to the product of "unknown" and "uncertainty", and divided by the "conflict of interest".
We have no idea who are the traders everyday.
We have no idea why they bought or sold in a particular day.
But we do know they must have their own reasons to make such decision.

Is the volume trustful?
Are all the buyers and the sellers independent? or They are just simply "creating" high volume by passing their shares from A to B, B to C, C to A, and then repeat it again?

Conflict of interest:
Trust me, unless you really have such closed and good relationship, or the person is already financial free, or the person really to help you, it is quite hard to find someone who will share his or her "golden-tips" in stock market.
Indeed, there are lots of "tips" in stock market. Simply because they are one of the shareholders or they want to earn your transaction fee. These are the so-called conflict of interest.

Lastly, let me use this simple equation sum up today idea.

probability ~ (Unknown*Uncertainty)/((Conflict of interest))

So, as you can see, if the conflict of interest is Zero, then the probability to succeed should be 100%. The problem is, how can we get a tips with conflict of interest = 0?

Written by: Xaivier Chia

Note: The above equation is simply created by myself based on my experience only.


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