24/01/2010

ALL THINGS BEING EQUAL

"Ceteris Paribus"
This is the formula all economists use and they are right to do so... The question is: What would happen if all things were not equal? or what if there is another parameter we did not consider comes into place?.
In the financial markets, random parameters (news...) is the rule and not the exception that's why when making an assumption, good economists and all analysts should end up by saying "Ceteris Paribus" which can be simply be translated by: "Unless I am wrong".
One of the best investor's qualities in the financial markets is the ability to recognize quickly when they are wrong. This is why, every time I do an analysis or a scenario I will try to input a failing scenario particularly in technical analysis.

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