Lesson # 39 : Yin and Yang and why the markets can never keep going up

The Chinese believe that Yin and Yang which literally means shadow and light connects seemingly extreme phenomenon. It is used to describe how seemingly contrary and opposite forces are interconnected and interdependent in the natural world.

Basically, they aren't opposites and neither are they advocates of good or bad. They simply represent two extreme forces and show that there is indeed a common or complementary point between them.

Hence, Ying and Yang advocates that for every right there is a wrong.

Looking at the Laws of Motion. Newton puts it rather simply

'For every action there is an equal and opposite reaction'

A lot of people question the working of the markets and ask why the markets can never stay on top. Or why can't they just keep going higher and higher? Or why after every rise there is bound to be a fall in the market.

There's  a lot of factors involved which would make this article rather technical. But simply put. The concept can be clearly explained through the Ying and Yang.

There's the upward movement which the indice is going to make which is the light that is the ying and then there is the downward movement which the indice is going to make which is the shadow that is the yang.

And there's a point of mutual coexistence between Ying and Yang. They aren't different from each other but are important for the each other's coexistence.

So there is a need for the market to correct every few bull runs. The idea is that when you have the light i.e. the market rising you  will have a shadow i.e. the market falling. 

And it will stabilize at a point where it's not too high and neither too low.

And that is why the markets can never keep going up.

-Doodle