Sir Isaac Newton's law and the market.

INVESTORS; NEWTON, Isaac, 1642-1727; STOCKS (Finance); INVESTMENTS; BUSINESS

The article attempts to demonstrate the similarities that exist between the behavior of market investors possessing the unique human quality of self-determination and mere bodies of matter moving through space. The author has chosen philosopher Isaac Newton not only for the relevance of his three laws of motion in relation to the movement of equity prices, but also due to the fact that after quadrupling his fortune at the beginning of one of the greatest speculative bubbles in history he managed to lose the bulk of his wealth by purchasing shares of the South Seas Shipping company at the peak of the early 1700's frenzy. According to Newton's first law, an object in motion tends to stay in motion and an object at rest tends to stay at rest, unless the object is acted upon by an outside force, when applied to the stock market, the relevance of this law is easy to see. It is the law used by momentum traders when determining whether they want to buy or sell a security.