Popeye, Michael J. Fox and reading cloud formations

Before I launch into this week’s newsletter, I need to update those of you who have been emailing me for feedback from the Beta Testers …

I’ve updated this page with more of their comments.

As you’ll see, it’s overwhelmingly positive. Any doubts I may have had about whether ordinary traders would be able to replicate the success of this system have evaporated!

Please remember that, if you’d like to be informed when this system becomes available, you must get your name on the priority list.

Plus, if you sign up to my twitter feed, you can follow the trial as it happens.

Popeye, Michael J. Fox and cloud formations …

Just over a year ago, I wrote in Trader’s Bulletin about the seven seismologists in Italy charged with manslaughter over the earthquake that killed over 300 people back in April 2009.

This week, those seven have been sentenced to six years in prison.

This trial has caused a huge uproar from the scientific community, due to the plain fact that pinpointing the time, location and strength of a future earthquake in the short term is, by scientific consensus, technically impossible.*

How can we blame people for not being able to predict the unpredictable?

It’s reminiscent of the attack on Michael Fish for his infamous denial of the hurricane in 1987.

Wrong science vs bad science

My kids’ answer to any unknown variable in their lives is to “Google it”.

Whether it’s “What speed did Felix Baumgartner reach?” or “Will I win my football match on Saturday?” – they believe there is a correct answer to be found by a search engine.

Mathematician Samuel Arbesman tells an anecdote about a former professor after lecturing his classes on a certain scientific topic on a Tuesday. “On Wednesday, he read a paper that was published and that invalidated the lecture. On Thursday, he went into class and told his students, ‘Remember what I told you on Tuesday? It’s wrong. And if that worries you, you need to get out of science.’”

Good science is much about being wrong as it is about being right.

And, it’s about reevaluating our beliefs – again and again.

Rumours … anecdotes … and the planet’s biggest gossip – the internet – mean that errors and lies are often banded about as “fact”. There’s nothing scientific about the way information is validated as it flies around Twitter.

I’m talking about stuff like that recent fake “Have I Got News for You” transcript with Jimmy Saville.

Or the Back to the Future hoax earlier this year that had sci-fi fans convinced that June 27, 2012 was the date they’d meet Marty McFly and Doc.

Or the well-known spinach error, in which a misplaced decimal point in original calculations made in the 19th century meant it was thought that spinach had 10 times more iron that it actually did.

Unlike gossip-mongers, science doesn’t accept anything as a truth without proof. In fact, the spinach error was corrected by scientists in the 1930s, yet the myth continues to be spread by exasperated parents trying to get their kids to eat their greens.

So, why you might be wondering, is Trader’s Bulletin talking about earthquakes and spinach?

If you thought there was a lot of lies and misleading information on the internet, claiming to predict what the markets are going to do …

Try Googling “How to predict earthquakes”.

Cloud formations … pigeon behaviour … measuring the sun’s rays …

There is no shortage of crack-pots claiming that they could have told you where and when every major earthquake catastrophe was about to hit.

According to Google Adwords, the phrase “How to predict the markets” gets 1,000 searches a month. While “How to predict earthquakes” gets 14,800.

Let’s get something clear here …

No one can accurately predict earthquakes.

And no one can accurately predict the markets.

Does that mean we should give up on the idea of making money from the markets?

Or put all seismologists out of a job?

No.

Because what market analysts and seismologists can do is work out probabilities. And they can use that information to guide human behaviour to make better choices.

And when markets misbehave, or earthquakes happen … well, I don’t doubt that market analysts and seismologists will still get it in the neck – human beings like nothing more than finding someone to blame for the unpredictability of universe.

If we want to be truly scientific in our approach to the markets, then it isn’t about having immovable rules.

Instead, it’s about constantly questioning our methods and beliefs, and about being ready to draw a line through everything we believe and starting again.

If you looked at the feedback page from the beta testers, you’ll know that that’s exactly what some of them have been doing – completely reevaluating their whole approach to trading.

Related posts:

What the science says about market direction Lies, lies and the markets