The greatest danger in analysis is the Uncertainty Principle for the experience of the analyst becomes the most critical role. There is the hidden problem or bias and preconceived notions. To illustrate this point, consider the story of the ship's Captain standing on the bridge of his giant supertanker on a very dark night. Out in the distance, the captain sees what appear to be the lights of another ship. He turns to his signalman and says, "Use your signal-lamp and send a message to that ship to turn to starboard (turn to the right) 10 degrees." The message is sent and very quickly, a reply is flashed back which states, "YOU turn to port (left) 10 degrees." The captain becomes annoyed and tells his signalman to flash another message, "I am a Captain and I insist that you turn to starboard 10 degrees." Back comes a message, "I am a seaman first-class, and I insist that YOU turn to port 10 degrees." The captain becomes very angry and shouts at his signalman to send the message, "I am standing on the bridge of a giant supertanker and as a Captain, I demand that you turn to starboard 10 degrees immediately." Very quickly came the reply, "I am a seaman first-class, and I am standing in a lighthouse"!

Just as the Captain thought the distant lights were a ship and didn't consider any other possibility, the market participant, be he trader, corporate treasurer or portfolio manager, must always consider all possibilities. This is one of the great difficulties in fundamental analysis. How do you know you have considered all possibilities? Quantitative analysis provides the sum of all knowledge and fears within the marketplace. What will not go up goes down and vice versa, Markets are never efficient for they will respond to what people BELIEVE even if that belief is clearly not true. This has given rise to the maxim - sell the rumor, then buy the news

Martin Armstrong