Water is unstoppable. Given enough time, it will defeat all the mortal ingenuity of the best and the brightest.
Two atoms of Hydrogen bonded with one atom of oxygen.
How can something so powerful in one context also be so weak in another. Jump off a high diving board and hit the water abdomen first and tell me it doesn’t hurt, but sit next to the pool and you can effortlessly push your finger into the water.
I think it is very helpful to think of relationships between financial markets in this way.
There are circumstances under which past conditionality allows one market to predict another for a given holding period with much greater accuracy than normal. In this context the weak bonds between molecules that allow you to push your finger into the water correspond to those occasions when leading correlative effects are absent and vice versa for those fleeting periods when regularities are plentiful.
It makes some measure of sense to look at what situations might make the molecules (predictive relations) hold closely together and those times when the mistress collects her dues from market protagonists.
Clearly having the predictive relations is enough. But some measure of ‘meta-understanding’ does not hurt, even if such classification is elusive or futile.
There really is nothing to lose by doing so.
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