Participants

All buyers and sellers

Lesson: A subset is easier to evaluate than the whole universe.

As you invest, speculate or gamble in any market-based item, all that you know and do not know about that market, economics, psychology, history and finance is bounded and limited by one other factor. And this factor is omni-present.

That factor is the collected perceptions, knowledge and psychology of other active and potential participants in that market. Or, restated for emphasis: You do not need to out-guess all the people all the time --- only the current and potential participants.

For example, you may hear an analyst state an opinion on a market, stock or item. It may resonate with you. You may get excited and want to buy (or sell) the situation. In order to decide you should attempt to judge the opinions of the entire set of current participants and potential participants in this item --- NOT the entire set of all market participants.

Try to size up and visualize the collection of current participants and potential participants only. Doing this may make determination of market direction easier since you need evaluate two small subsets (current and potential participants) instead of the universe of all investors, speculators and gamblers.

See also: Price

The investment axiom that is always valid: Caveat Emptor

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