Vibration, Frequency, Energy

And The Moneyball Method

The first essay in this series named three primary characteristics of all life forms and compared them with civilized society: money, prices and free markets. The second related three major components of physical well-being and how they can be used to promote financial adaptations: cash flow, risk capacity and funding status.

Continuing with the theme of interconnected ideas, this essay uses the universal building blocks of vibration, frequency and energy to illustrate the capital market data sets needed for individuals to invest and be efficient.

For this purpose, Nikola Tesla’s famous quote, “If you want to find the secrets of the universe, think in terms of energy, frequency, and vibration” is a good way to describe the foundational elements of financial market behavior.

Energy is interchangeable with matter and return on investment is meant to exchange for goods and services. Frequency dictates the behavior of matter – and when they are combined in certain ways, they create harmony. That describes the correlation needed for portfolio efficiency. Vibration is the constant motion of atomic particles - and it describes the price volatility used to measure the financial risk of securities.

As the product of Harry Markowitz’s Nobel Prize winning work, median return, correlation coefficients and standard deviation are the quantitative aspects that define each asset class of securities. For Moneyball purposes, they are the defining attributes for any asset class to be tested. Known as Capital Market Assumptions, they give each asset class its objective identity and as such, they are the most reliable way to anticipate the behavior of each asset class.

This is not predicting the future of human volition and innovation! This is anticipating the possibilities in the absence of perfect information about future market performance.

The raw data for all three is prices. Median returns are price movements within their historical range. Correlation is price movements in relation to other asset classes. And standard deviation is their price volatility. In this context, it should be clear that the price mechanism must operate without force and that price data must be respected.

However, in a heavily regulated welfare-state culture, the market strategist and economic analyst bureaucracy is dependent on their own subjective forecasts. Whether it is private firms, public policy think tanks, or State agencies, they all rely on conservative assumptions, forward-looking projections and limited historical data.

Think of them as the baseball talent scouts that were replaced by Moneyball. And for your lowest cost per win, please follow the link below:

https://www.amazon.com/Moneyball-Method-Middle-Class-Manifesto-Objective/dp/1696009111/