Markets appear chaotic. Not chaos in the physics sense but chaotic in the common daily use of the term.

It often appears that nothing makes sense. Markets plunge one minute and then rally the next. What in the world!

Earnings for a stock can keep going up year after year yet the price of the stock can keep going down year after year.

I sit here in my office looking at prices on the screen jumping around like a cat on a hot stove. Why did it just go up a tick then down two. It makes no sense to me in my chair.

But it makes perfect sense to the floor trader or broker. They see the bids and offers and the size of those bids and offers so the price jumps are logical.

They look at the market and they think that the upstairs traders like me must be crazy. Why are those upstairs traders buying today and not yesterday? They must be nuts. My behavior, as witnessed by my orders, seems chaotic while their behavior on the floor seems chaotic to me.

Chaos comes from our perspective, not the market.

The market is.

It is a form of spontaneous order.

Look at it from another perspective and it all makes sense.

People who say the market is crazy don’t know the market. They are like a dog looking at a human.
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