Analogies, adages and markets

'Sell in May and go away.'

'Bull' markets.

'Bear' markets.

'Bubbles'.

'The wall of worry.'

'Head and shoulders.'

Have you noticed how common the use of analogy and adage are in finance? In fact, analogy is pervasive; it's a significant factor that drives decision-making in financial markets.

One has to wonder whether these concepts are: an accurate, objective description of what all traders are really seeing; or are the analogies themselves ironically driving behaviour in the market?

Warren Buffett rather famously prides himself as being somewhat of an investing contrarian, but what's clear is that he - and his long-time business partner, Charlie Munger, were good at doing - is to simply not adhere to the pervasive analogous logic of Wall Street. Buffett being based in Omaha, Nebraska - even chose to live far away from the 'group think' of the industry.

For an industry that prides itself on data and empirical evidence is sure is heavily influenced by a plethora of unchallenged, mythical constructs that govern the psychological foundations of its choices.

Where else are there shadowy, unchallenged sayings and concepts that predictably guide the actions of the players in an industry?

Black Friday anyone?