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Saturday, May 31, 2008

Random Thoughts

The jungle has the greatest biodiversity with thousands of species each occupying a specific niche. The only direct conflicts we saw were between two spiders, and two monkeys fighting over the same niche. The forest had three main levels, first at the ground to 15 meters, 15-35 m and the canopy above 35 m. Some market ideas from the learning experience involve the separation of the levels and the specialization within each level of the forest. The occupants and action at the bottom of the forest are much different than those in the middle or top. As in markets different techniques are needed at tops, middles, and bottoms. It is hard for one species of trader to hope to avoid death at all the levels. It is very hard to start on the bottom of a market and survive to the top. Extreme specialization is the rule in the jungle. There is no reason that same type of specialization would not be required in the market jungle. However in many ways, current markets lack real diversity. The correlation among markets has been a result of this lack of diversity. Too many in the same niche or trade. The lack of diversity causes inability to absorb market shocks. In the jungle, when a large 800 years old kapok tree falls, a huge gap is created. Many species rush in to fill the gap, but due to the rush, the vegetation is weak. Similar action may occur in market gaps when a shock hits. The initial occupiers of the gap are weak holders.

- Jim Sogi

How true!

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