“There is a place. Like no place on Earth. A land full of wonder, mystery, and danger! some say to survive it: You need to be as mad as a hatter. Which luckily I am.”- The Mad Hatter from Alice in Wonderland.
The rabbit hole metaphor has been used by teachers and authors to demonstrate the adventure of learning. One’s comfort level during the trip notwithstanding, it’s all about the lesson(s) learned.
What can be more adventuresome than trading the stock market?
For that matter, if you’re new to the stock market and trading, is there a seemingly deeper rabbit hole than learning how to trade once you enter? A new student’s life flashes before him as the market’s rabbit hole reveals deepening entryways with tangential pathways. A look over his shoulder reveals more doors amid hallways with stairways up and down to more levels.
The stock market rabbit hole (SMRH) is not as shallow as the one seen in Bugs Bunny cartoons. Elmer Fudd would stick his head down the hole and voila, there sat Bugs in an easy chair chewing his carrot. A second or two later we’d hear, “Eh, what’s up, doc?” Mr. Bunny’s residence did not have hallways or split-foyers to give Bugs’ home depth.
To a beginner, the stock market rabbit hole (SMRH) appears to have more permutations, twists, turns, paths and tunnels than Boston’s Big Dig. The SMRH expands, contracts, twist and turns in and on itself as traders seek a rewarding adventure.
Rabbit hole travelers, whether scurrying through a mind map, subway map, process map, or stock market finance map follow twisting paths in search of a truth, knowledge, or the nature of things. The “nature of things” in the SMRH means profit. SMRH travelers search for truth, knowledge, and profit.
The function of the stock market is referred to as price discovery. It “discovers” price every minute of every day as it accounts and then discounts all relative data affecting stocks, bonds, and future cash flow.
A new SMRH traveler gets a taste of the market’s fickleness, volatility, fear, and greed as price moves sharply through well-considered but doomed calculations that logic (or was it the Chesire Cat?) declared valid.
The rabbit hole becomes crowded with bulls and bears clogging up the hallways and stairways. Paws are slapping downward onto rising horns with both taking positions as opposing armies might on a field of battle.
The stock market’s rabbit hole is multi-leveled and multi-chambered according to size and economic significance. The bond market, for example, may not be as splashy as the stock market but it is easily two to three times the size of the stock market.
Furthermore, the way market participants move around (trade) within each level, within each chamber makes for the bull-bear drama that makes day to day headlines.
It’s the Mad Hatter’s tea party and the Queen of Hearts croquet game in progress simultaneously. All participants are, like poor Alice, changing in size, significance, and outlook.
Some time later a cry is heard: “Eh, what’s up, doc?”
Startled students reach out and turn the page of their book, “How to Trade Stocks,” Chapter Two.