[Dexter on Custom Street] The Bishop of Seville on Wine

“I have enjoyed great health at a great age because every day since I can remember I have consumed a bottle of wine except when I have not felt well. Then I have consumed two bottles.” – The Bishop of Seville

In applying technical analysis to the financial markets, the biggest upsides come from high-probability trend reversals that happen at the trough of the deepest price abyss. For a long-only market like we have on Customs Street, an inverse head and shoulders (IHS) pattern after a long downtrend has been known to signal the end of the downtrend. However, as is usual with everything else in life, a majority of market participants prefer to buy only when prices are already going up and sell when prices are plummeting. Essentially, they keep things ‘simple’, seeking the confirmation of the direction of prices from the behaviours of their fellow members of the herd and lending credence to the deceitful phrase, ‘the wisdom of the crowd’.

Interestingly, this pattern of behaviour continues to remain valid and particularly convenient, for if the majority exploited the same trading strategies, then technical analysis and related quantitative techniques would be like the thin margins available for players in the downstream oil and gas sector. If his writings were true, then, Isidore, the bishop of the Mediterranean city, was doing something the regular folks would probably not do; increasing his alcohol consumption under conditions of illness. The moral directions and medical consequences of his actions are not the subject of this writing, thank you very much.

Delving into the philosophical implications of the actions of our dear bishop would demand first, a glossary of terminologies (as simple as the terms may seem), then an exposition of the many relationships between the terms and the conclusion, if possible, of the entire construction. For instance, we could theorize on the sizes of the two bottles consumed on sick days in relation to the single bottles consumed during the days of good health or the integrity of his memory in remembering alcoholic metrics while he was under the influence of alcohol. But in order not to lose the general theme of not suspending disbelief and pursuing the contrarian path in the financial markets once in a while, a very simple lesson can be drawn from the propensities of the 7th century clergyman.