The Financial Markets as A Scientific Laboratory Analyzing the Markets Through the Lense of Scientific Method

The alchemical laboratory of old. Like alchemists, today’s cosmoeconomics field also seeks to reveal, define and predict the transformations between natural and cosmological phenomena and stock market movements.

Cosmological Economics uses the financial markets as a laboratory of experimentation to test out theories and techniques of analysis and forecasting. This practice serves to shed the light of science into the chaos of supposed randomness of financial phenomena. There is no better way to prove, once and for all, that some kind of predictable order governs the financial markets than to make predictions and produce forecasts, whether short or long term, based upon logical and consistent practices that are repeatable.

The greater the number of successful forecasts and predictions that can be demonstrated, the closer we come to proving that Random Walk Theory is merely a convenient explanation for an inability to perceive the order which lies behind the markets. If the principles of Cosmological Economics or the Law of Vibration are able to produce an above average result in forecasting, this alone proves there is some kind of probability that can be determined in advance. Any probability consistently performing significantly above 50% will demonstrate that there is a non-random component to market behavior. The higher this percentage, the better the proof of order.

Gann’s 92% success rate demonstrated in his Ticker Interview provides an almost perfect record, though not all of those trades were actual “forecasts”. He could just have had a very efficient system that had a high trading success rate. While this might not necessarily prove an underlying system of order, it does demonstrate the value of a well-designed trading strategy, so it still provides proof of the exceptional value of technical analysis when applied to trading systems.

Through the ongoing process testing and trial using techniques of forecasting and trading, if such connections and correlations as we have discussed can be repeatedly proven to exist and a working theory with laws and rules can be elaborated, then any scientific thinker must, if he is a true scientist, consider the potential reality of our entire hypothesis and the implications that evolve from that. Just as with Chaos Theory, if mathematical order can be shown to exist within what was previously considered to be chaotic noise, then we will have made a significant breakthrough in the science of economic and psychological theory.

What Are Financial Markets?

Taking a closer look at our economic “laboratory”, the financial markets, we must first consider exactly what the financial markets are? As mentioned earlier, Dr. Jerome Baumring, the most advanced proponent this field has known, defined a market as “a barometer of mass human psychology.” For what is a market other than the combined thoughts and feelings of the particular group of people who have some interest in a particular subset of the socioeconomic phenomena we call a market.

As explained, the thoughts and feelings of this mass public fluctuate according to a wide grouping of internal and external influences and considerations, causing people’s thoughts and feelings to behave in ways that reflectively cause the price of the market to move up, down or sideways correlated with the summation of the combined positive, negative or neutral thoughts and feelings about this particular financial entity.

The angry crowd. Depositors gather in the rain outside the failed Bank of United States. New York, 1931.

Financial Markets as a Human Thought Form

In a sense, we could actually consider a market to be a mass human thought form. And in considering the nature of the possible forces which act upon the fluctuations of this mass human thought form, we discover that at the simplest level they all boil down to three simple variables: hope, fear and indecision. These three psychological variables account for the only three types of fluctuations we find in the markets: up, down and sideways, respectively.

Hope, Fear & Indecision

A diagram from the book “Thought-Forms”, by Annie Besant & C.W. Leadbeater depicting human thought forms as multi dimensional waves.

When people are hopeful, they feel confident and they buy, causing prices to go up. When they are fearful, they sell or even panic, in which case, we see markets go down. When they are indecisive they tend towards inaction, and similarly the market will remain the same moving sideways. So, in the simplest form of analysis, all market action can be boiled down to these three fundamental variables of hope, fear and indecision.

Simplifying the phenomenon this way begins to make our analysis simpler to understand and approach. Really we only must find something that will account for 3 specific forces, an upward force, a downward force, and equilibrating force, which need not even be something additional but the balancing of these two dynamic forces or energies.

Without going into much further detail here, one can see that the study of the markets when approached from the principle of physics and energy, can be considered as a sort of abstracted phenomenon that can be analyzed mathematically, geometrically, energetically, or in any other way that science uses to study and analyze any phenomena. And these are some of the tools and processes that are used in the analysis done through Cosmological Economics, using the markets as our alchemical laboratory.

But the goal is clear. Either predictions can be made within ranges of accuracy and consistency so as to show a greater probability than randomness, or they cannot. If such higher probabilities can be demonstrated, then we have potential theory of interest here which warrants further investigation. If results beyond chance cannot be attained, then the theory is likely false.

A diagram from NASA charting the frequency and cyclicality of sunspot activity from 1985–2015. Solar storms and other celestial electromagnetic phenomena have measurable impacts for life (and economies) on earth.

But even if the theory of market order is false, we are still left with the very useful and practical study of technical analysis, which provides the capability to produce highly efficient trading systems, like that which Gann used to generate a 92% success rate. A system like this would generate a fortune for any user, whether he was able to forecast or not. So in the end our research is thoroughly justified by either of two potential outcomes:

1. The financial markets are non-random and possess an ordering system behind them which can be understood and used to predict the markets, forcing a reevaluation and extension of scientific theory to include an unknown correlation between physical and socioeconomic phenomena. This would be a truly revolutionary discovery and scientific breakthrough!

OR

2. The financial markets are truly random and there can be found no system of order behind them at least that is discernable using current theories and techniques of science and analysis available today. However, valuable trading systems can still be developed which take advantage of technical understanding of this random phenomena allowing for the development of strategies that produce above average performance, allowing for greater profitability by those who understand them.

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