Allegory of the Cave

There was once a gathering of people who have lived chained to the wall of a cave all of their lives, facing a blank wall. The people watch shadows projected on the wall by things passing in front of a fire behind them and begin to designate names to these shadows. When they see the shadow of an object, they assign a word to call it. Let's say it's a book. They see the shadow of it and assign the word "book!" But it's not really the actual book that they are calling book, it's just the shadow of the book. The shadows are as close as the prisoners get to viewing reality. The prisoners are unable to see these real objects that pass behind them. What the prisoners see and hear are shadows and echoes cast by objects that they do not see.

Every day, these people in the caves watched shadows projected on the blank wall. They created a game of guessing which shadow would appear next. If one of the prisoners were to correctly guess, the others would praise him as clever and say that he's the master.

Then one day, one of the prisoners, let's call him prisoner Z, got away and leaves the cave. He walks outside into the sunshine for the first time. He is immediately blinded by the sun but his eyes began to adjust.

For the first time in his life, he is exposed to sunshine and light. He is shocked at the world he discovers outside the cave and does not believe it can be real. He sees actual flowers, the colors of birds, the nuances on the bark of trees. When told that the things around him are real while the shadows were mere reflections, he could not believe it. The shadows appeared much clearer to him. As he becomes used to his new surroundings, he realizes that his former view of reality was wrong. He can now finally see the true forms, shapes and reality of the shadows he thought were real. He begins to understand his new world and sees that his former life and the guessing game they played is useless.

Now, what would Z think of his companions back in the cave?
He felt sorry for them and their limited reality.

Immediately, he came back to the cave to try to help out his companions who are still mired in confusion and error. But he is no longer used to the darkness and had a hard time seeing the shadows on the wall. Because he's become used to the sunshine and light, he can hardly see anything under the ground and looked confused. To the prisoners in the cave, he looked like he's lost. He eventually finds them and urged them to escape the cave and venture forth to the outside. But they laughed at him and thought he was crazy.

The other prisoners thought that the journey has made him stupid and blind. They threatened to kill him if he tries to set them free. Most people are not just comfortable in their ignorance but hostile to anyone who points it out. When you tell people they're wrong, you get nowhere. You offend them.

Human understanding of truth is limited by our experiences. We can never fully understand reality because we can only know about the things we have experienced. So our perception of reality is based upon this -- that we must transcend this by expanding our knowledge.

I know you've been wondering. What does this have to do with trading?

Last month, on the 15th, there was a gathering..

..of people who have lived chained to the wall of a cave all of their lives, facing a blank wall, and some people who got away and left the cave, walked outside into the sunshine and discovered what it's like outside the cave. Some of these people shared what they found when they stepped outside their comfort zone. Their own journey to discovery. The lessons they had to learn the hard way. Their trials and tribulations.

Think of the people trapped inside the cave as majority of the people who entered the stock market world. We symbolically represent the prisoners in the cave, all of whom are stuck perceiving reality in a fixed and specific manner. We are all prisoners in the cave. No one chooses to be in the cave. It's just where we all happen to begin.

What about prisoner Z, the person who escaped the cave?

This represents the small handful of people who dare to think and act in a different way from the crowd. It's not because they're better than everyone else that they've "escaped the cave." It's simply because they've made a decision to consistently step outside their comfort zone, face their fears, and think differently.

So how can you escape this cave?

We all have the capacity to learn. But not everyone has the desire to learn.

The process of progressing out of the cave is about getting educated and it is a difficult process. If you want to leave the cave, you need to question your beliefs. When getting an education, there is a struggle involved. We want to resist because knowing the truth can be a painful experience, to a point that it's easier to be ignorant. It takes courage to step outside your comfort zone and think different than before. Not everyone will understand and be happy for you. Just like how the other prisoners responded to prisoner Z's return, you can expect friends and family to laugh and ridicule you. It's normal to face criticism once you leave the cave.

We all start in that cave. But we don't have to stay there. Perhaps on  that day, a glimmer of light punched a hole in your most basic assumptions. Will you break free to struggle towards the light even if it costs you your friends and family? Or will you stick with comfortable familiar illusions?

Remember, it's not enough to leave the cave. It's more important to stay outside of the cave.