This is the third core of the dow theory: the theory of speculation. Markets can be predicted because they are speculative, and speculative principles are one of the fundamental attributes of markets, which, if not speculative, would not exist. The speculative rationale of the dow theory has been ignored, or has been perceived as non-market attributes. The theory of speculation is whether or not one's expectations can be reflected in the market, which can be said to contain expectations of the market, which are an integral part of the market, and thus one of its components. It can be said that the reason the market can be forecasted is precisely because you are predicting the market, so predictions are predicting what you are predicting, and individualized projections of group behaviour. As a result, the market, as predicted by all, is a two-way street。
“inclusion and digestion of market behaviour”, as proposed by technical analysts, is one of the three main assumptions underlying any technical analysis. Its main idea is that every factor affecting prices (both intrinsic and external) is reflected in market behaviour, and that one of the fundamental principles of the dow theory is that “anyone knows, wants, believes and expects anything in the market”. Thus, market behaviour necessarily includes speculation. Its speculative rationale is the most dynamic factor in the market and brings to it important predictable elements. However, there has always been no firm definition of speculative behaviour, and it would be useful to give a definition of what characterizes speculative behaviour: speculative behaviour is the act of taking positive measures in the hope of achieving what it expects, wants and believes, and is highly random and uncertain。
In the definition of speculation, it is clear that the essence of speculation is that the subject (investor)'s false desire is reflected in the object (market). If the market reflects the wishes of a large number of investors, this is what everybody does in the real sense of market speculation; but if the speculation reflects the wishes of a mere government or policy, it can lead to excessive speculation in the market; and if the speculation reflects the wishes of those who wage war, it will lead to limited speculation. It is therefore necessary to draw a distinction between market speculation and excessive speculation and extreme speculation。
