Dominance or Certainty

 

Winner Takes It All

The winner takes it all (takes it all)
The loser has to fall (has to fall)
It's simple and it's plain (it's so plain)
Why should I complain? (Why complain?)

So Wall Street which is it? Dominance? or Certainty?

The Wall Street stock market is all about winners and losers, by dominance. But the stock market also hates uncertainty. You can’t have certainty in a contest with only two parties which will be decided by dominance.

The stock market is not certain,which is why there are Index funds and why a random walk of the stock market does better than day trading. Collectively you can achieve certainty. Individually you might achieve dominance but that is at the expense of allowing uncertainty. A contest where there are only two outcomes and two players can be 100% dominant, but that outcome is purely by luck, a random occurrence if the game is fair and the parties are equal. In this case the certainty that the dominant winner is the certain winner is the value of that outcome, 100%, multiplied the reciprocal of the probability of that outcome, which is 50%. Thus even though the dominance of the winner has been established, the certainty is only 50%.

The difference between certainty and dominance can best be seen in the jury system. A 7-5 jury vote indicates 100% dominance, but it is only 80.66% certain.  A 12-0 finding of Guilty, or Not Guilty,  remains 100% dominant, but the certainty has increased to 99.98 %.

Thus for a single stock transaction, you can be dominant or certain, but being dominant does not mean being certain. However being certain does mean being dominant.