Daily Activities

Today is two weeks since I began looking into the financial markets pretty much non-stop. Things started to slow down yesterday because yesterday was the second full day of my current fast. I don't have any energy to work on my financial market 'analyses' today, I'm totally drained. Yesterday was bad too. It's hard for me to explain what I've learned because I can't focus at the moment -- suffice it to say that I've been lead into the field of "music theory" and "Fourier transforms" that are a form of "trigonometric interpolation" and the mathematical language of wave theory. Basically Fourier analysis is a mathematical prism that separates data that contains cyclicality into several different waves, each with a precise amplitude and frequency. The analogy of a prism is a correct one, Fourier analysis does to a time series of data what a prism does to white light -- that's why Fourier analysis is often called "spectral analysis."

I've learned more about how to properly use moving averages to predict price movements -- mainly the duration of the moving average is very important, and the 50% displacement of the moving average is also key. Before starting to eat again, I really don't see how I can get back on track with my work. But also I've learned that moving averages are, obviously, smoothers of price movement (which can be quite erratic), and have the effect of hiding the periodic movements in price that take place both at and below the duration of the average, and, in contrast they tend to reveal the periodic movements of price that takes place beyond the duration of the moving average. The true grasp of using the moving average to predict price, I haven't grasped yet, but seeing as its such a fundamental technical indicator in the financial markets, I think it warrants depth of study.

I have also bought, in the past two weeks, all the books from TradingFives.com, and the collected works of RN Elliot. I'm still waiting for the latter in the mail, I don't think it has shipped yet.

Yesterday I spent some time listening to Bob Prechter and Jim Rogers, both of whom I admire greatly, though I don't really understand everything they say. I wish I knew where and how Bob gets all his data, he has many interesting charts.

Last night I took a broader approach to the markets rather than just analyzing price movements. I want to understand the markets as a whole as well. So, I learned last night that the financial markets are a mechanism or series of mechanism that permit the transfer of funds from those who have an excess (i.e. savings or "capital" -- which is where the word capitalism comes from) to those who have a lack. The first of three divisions consists in the capital markets which is the stock and bond market where companies and governments sell the promise of future earnings in order to raise money for their endeavors. The second is derivatives market which was designed to allow businesspeople and investors to mitigate risk by binding one party of a contract to buy or sell a given asset at a specified price in the future. The third is the the foreign exchange market which provides the mechanism for international trade.

Also, I thought of an asset in a different way last night when I read in one of my textbooks that "Individuals own real assets in order to produce income and wealth." So an asset is something that produces wealth. I never thought about it like that before. If whatever you have is not producing wealth, then it's not an asset. Then the question becomes, what is wealth? Certainly things like the Sun, the soil, water, air, are definite assets that produce pretty much all the wealth we can attain.