A few of us have met market shamans who seem to understand what is going to happen next in the market and can turn pennies into millions of dollars. They are a rare breed that has this drive to understand and apply knowledge to the market. The two skills of the market shaman include forecasting and understanding human nature.
Both of these skills work together and are related as a narrow and wide lens. The economic system is the collective action of individual human effort. Understanding people and how they act on a macro scale gives the Shaman a full picture of what is going on in the market and how events play out.
As the economy globalizes it is necessary to view individual and economic behavior from different cultural vantage points. Each culture comes with a defined way of thinking about issues and new information is sifted through that culture’s decision making matrix to come to possible conclusions.
1. Forecasting: Forecasting the market is an essential skill of developing strategies and investment opportunities that pay dividends. The further the projection the more likely plans and contingency plans can be created. Unfortunately, the further the projection the less accurate they become. A market shaman constantly watches the market, educates him/herself, and connects the trends to understand where the market is heading.
2. Understanding Human Nature: Markets are based on human behavior. We may describe them in terms of economics, numbers, charts, dollars, and graphs but they are essentially still representations of human behaviors. Understanding trends is one aspect of being a market shaman while understanding how people act and react to the market is another aspect. Studying human behavior will help predict market reaction to events.