Who this entry is for — Anyone separating «external fundamentals» from reading the auction. Steidlmayer & Koy, *Markets and Market Logic* (1986), ch. 1.
Source: Steidlmayer & Koy, Markets and Market Logic (1986), Section I, ch. 1. Raw:
raw/patrimonio-emiciclo/studio-steidlmayer/mml/cap-01-introduzione-scopo.
Prerequisites
Steidlmayer tradition introduction, Auction Market Theory.
Purpose of the market
The purpose of an organised market is to facilitate trade. The marketplace's most important function is market-generated information — transactional data (price, time, volume) born from activity itself, not external projections.
| Type | Origin | Character |
|---|---|---|
| Market-generated | Transactional activity | Present reality, measurable |
| Outside | Balance sheets, crops, news | Applied to the market, not produced by it |
Graham & Dodd study outside information to find price below value. Steidlmayer adds: how to tilt odds by reading the market itself.
Stated goal: decentralise market understanding — anyone can observe, reflect, and decide; knowledge need not be «bought» from an intermediary.
Organising the chaos
The key is segmenting apparently random activity into measurable, monitorable data. Steidlmayer uses the bell curve (normal distribution) to organise the transactional time series — basis for acting or not acting.
Two book equations — Price + time = value defines market reality. Results = market understanding × (you + strategy) — see Market Logic principles.
On the bell curve you read how, where, and when participants use the market — filtering irrelevant factors in the present moment.
What the book refutes
The text aims to dismantle four widespread ideas: random walk; directional forecasting as reliable method; efficient markets (price always equals value); risk myths detached from sound investment. Price and value do not always coincide — the gap is where opportunity lives.
| Knowledge | Source | Role |
|---|---|---|
| Direct | Personal observation over time | Required verification |
| Derived | Books, teaching | Starting point, not truth |
Even this book, once written, becomes derived knowledge: the reader must verify on their own markets. Finance lacks the laboratory experimentation culture of other fields.
Common mistake — Ignoring auction data and trading headlines or fundamentals alone. Market-generated information changes over time and is verifiable on the chart.