> Or do you buy on Friday because you are not a unique snowflake and others will notice the same historical pattern and therefore reverse it in the future?
Well, as you said, you're not a unique snowflake. Many people will make that extra thinking step too.
You can try and make another step, try to account for people aiming for the trend reversal. But you're not a unique snowflake - some people will think about it too, and account for those people the same way.
If this starts to look like infinite series, it is, and it converges to something, and I suppose there are some mathematical truths to be said about it. But the practical truth is, any pattern that becomes noticed will not end up reversed. It will be driven back down to random noise. This is the anti-inductive nature of phenomena like stock markets: once a pattern becomes known, it disappears.
What you describe is similar to what beagle3 described. A world where patterns exist and slowly fade out.
But that is not the reality of the stock market. See my reply to beagle3 for two ways to counter this view.
Specifically to your point that patterns exist but do not reverse: Then one could make money by just trading against the pattern. If no "punishment" comes down the line in form of a reversed pattern, there would be no risk.
The simplest example would be a hypothetical irrational bull market euphoria. More and more new investors come in under the assumption "OMG! Every day the prices are higher than yesterday!". If that pattern would not reverse, there could not be an "irrational euphoria" because prices would either rise forever or stay on the highest level. So it would be only rational to join the choir. Much to gain, nothing to lose.
Well, as you said, you're not a unique snowflake. Many people will make that extra thinking step too.
You can try and make another step, try to account for people aiming for the trend reversal. But you're not a unique snowflake - some people will think about it too, and account for those people the same way.
If this starts to look like infinite series, it is, and it converges to something, and I suppose there are some mathematical truths to be said about it. But the practical truth is, any pattern that becomes noticed will not end up reversed. It will be driven back down to random noise. This is the anti-inductive nature of phenomena like stock markets: once a pattern becomes known, it disappears.