Ever since I was a child, I have always been interested in the stock market.

Now, I’ve gambled a bit here and there, and made a little money here and there, but I’m certainly not a Wall Street guru. And I don’t have enough to buy one of those HFT machines that everyone is talking about, and that might even be banned soon.

Still, markets in general have always fascinated me.

There’s a book called “The Wisdom of Crowds” by Surowkiecki where he describes some pretty weird stuff. Things that only the “crowd” can know.

For example, in the late 1980s the space shuttle exploded. Live on television. A horrible event. There were three possible reasons. And for every potential reason, there was a company that made that particular component.

Let’s call them Company A, Company B, and Company C.

Within thirty minutes, all three companies literally crashed on the stock market. Then, before the end of the day, Company A and Company B had returned to where they were when the markets opened.

Company C, however, never recovered.

Six months later, NASA scientists determined that Company C was responsible for the explosion and the deaths of those people.

However, the markets, the great mass of merchants, probably none of whom had ANY experience building space shuttles, knew this.

What took NASA six months to discover, the crowd knew in a day.

One of my all-time favorite books on the stock market is called “Reminiscences of a Stock Trader” by Lefevre. Lefevre is the pseudonym of Jesse Livermore, one of the most famous market traders of all time.

I like that name, “trader”, rather than “investor” or even “speculator”.

Anyway, one of his famous quotes is:

“Don’t fight the tape.”

The tape you are referring to is the old ticker tape that comes out with the stock prices on there.

Which means that if the stock market is going up, you should go up with it. If the stock market is going down, you should be going down with it.

See, in his career, Livermore frequently tried to “fight the tape,” meaning he thought he could “outthink” the markets. But every time it burned.

When it comes to human behavior, we have our own internally programmed tape. The instincts that have been in our heads and DNA for thousands of years.

You can accept it or you can try to fight the tape.

But to be an efficient trader in your own reality, “don’t fight tape” is good advice.