Rationality in Capital Markets

In capital markets, there are always people telling others to be "rational." Behind every so-called rational model, however, there is invariably a set of value systems serving as its basis. The attempt to defeat the market through these so-called foundations is, in fact, the biggest psychological underpinning of all such bases—and this is the root of all capital-related lies and myths. True rationality lies in seeing through these various "rational" deceptions. Rationality has always been the "Emperor’s New Clothes" fabricated by human imagination; this is no longer a novel insight at the philosophical level.

What is even more ridiculous is that people poisoned by this so-called rationality often reduce rationality to a mere word game. When words are monetized, this word game unfolds in an even more shameless manner. Yet true rationality has always been rooted in the present moment and in practice—and practice, in turn, has always been the rationality of the present. Just as sexuality is something acted out, not talked about, rationality works the same way.

From the perspective of capital markets, all forms of "participation" (in market transactions) are acts that "can be participated in," and thus are "participated in" as part of the market itself. In other words, the moment you participate, you and the market become one: you create the market, and in turn, the market creates you. This process of creation is always rooted in the present, and thus is also structured by patterns. True rationality is not concerned with the specific form of the participation pattern, but with how this pattern manifests in the present—and most importantly, how this pattern "dies."

What is born must die. If nature truly has any law, this is the only one—and the same law applies to the market. The so-called "law" is nothing but fate. In the market, "death" (the end of a trend or pattern) is the norm and an inevitability. Survival, on the other hand, must be based on "birth" (the emergence of a new trend or pattern). The so-called "endless cycles of birth" are, in reality, endless cycles of death. The moment you become dependent on a certain "basis" (e.g., a fixed rational model or value system), you are already trapped in the process of "dying."

Life and death have always been structured by the present moment—and the capital market is no exception. The delusion of so-called rationality is the belief that one can escape life and death by ignoring them. Everyone in the market is entangled in the cycle of life and death; there is no way to flee from it. Life and death exist in the space between each breath. To face life and death calmly without trying to escape them—without this great courage, all talk of "rationality" is nothing but the whimper of a dying mindset. For the market, participation means stepping into the cycle of life and death: to move unhesitatingly between various patterns with composure, free from attachment, and to "generate the mind without abiding in anything." Only when the mind is truly free from fixed attachments can one face life and death (market trends and their endings) with calmness.

For market participants, the first and foremost thing to keep in mind at all times is the present state of the participation pattern they are currently using. Yet most people in the market have no idea what they are actually doing. To put it bluntly, they die without even knowing why they died—and the market is largely composed of such people. This has nothing to do with the size of one’s capital; large funds often "die" even faster. Cases of total collapse overnight are far from uncommon.