In 1997, a Financial Times contest in reading other people's minds was won by the number 13, although the logically correct answer was zero.
Essay · September 16, 2026
In the eleventh chapter of Genesis, people speak one language and decide to build a tower “whose top may reach unto heaven.” They use brick for stone and slime for mortar, whatever is at hand. The tower is never finished. Their languages are confused. The builders stop understanding each other and scatter across the earth. What remains are floors. Each speaks its own tongue.
The market is built like that tower. Every participant is building a model that reaches heaven, a final one that explains everything. Nobody finishes it. The floors still stand, and each has its own language. Take a sentence you have heard hundreds of times: “The market fell because people got scared.” That is the language of the ground floor.
From here I will climb the tower on foot, level by level, and translate that sentence into the language of each floor. Read this slowly. The feed has trained us not to hold a single thought for long, and this climb does not work without focus. This whole text is about the climb.
There is no elevator in this tower. I am taking the stairs, and so are you.
The Language of the Ground Floor
On the first floor, cause and effect stand side by side. People got scared. They sold. The price fell. The model is closed: an event, a reaction, a result. It needs nothing else. Most news commentary is written in this language, and I do not mean that as a reproach.
Let me say it plainly, once. The first floor is right more often than lovers of complex schemes like to admit. Fear really does sell. Greed really does buy. If you describe an ordinary market day in the language of the ground floor, you will rarely be wrong. The person at the foot of the tower sees the square better than anyone, because they are standing in it.
The difficulty lies elsewhere. From the first floor you can see what happened. You cannot see why it happened now, and in this particular way. The fear was there yesterday, and a week ago. Yesterday the market did not fall.
The Level Where You Hear the Neighbors
On the second floor, other people enter the conversation. A participant sells not only because he fears a drop. Others may get scared too. He wants out before them. His decision is no longer about the asset or its price. It is about the line at the exit, where it pays to stand first. Same asset. Different motive.
On the third floor, expectations about expectations appear. A large player sells not because he thinks the asset is expensive. He sells because he expects that everyone else expects a wave of selling. I think about what you think about what everyone else will do. Read that again, slowly. The whole structure rests on it.
This level was described ninety years ago. In chapter twelve of the General Theory, published in 1936, Keynes compared professional investment to a newspaper beauty contest. The prize went not to the person who picked the prettiest face. It went to the person who guessed the choice of the majority. Keynes called this the third degree: anticipating what average opinion expects average opinion to be. He added that some people practice “the fourth, fifth and higher degrees.”
The tower was started long ago. We just rarely climb above the second level.
When Everyone Lays the Same Brick
The fourth floor is unpleasant, because this is where obviousness starts to change the future. If a drop is so obvious that everyone is ready for it, it may not happen at all. Those who wanted to sell have already sold. Those who wanted to profit from the fall have already gone short. No one is left to sell. The fall has already happened. In people's heads.
Now the mechanics. A stop on a short position is a buy order waiting for its price above the market. The more people shorted the obvious drop, the more demand sits above the current price. A crowd certain of a fall is laying the bricks for the next rally. Short sellers create future demand with their own stops. A small push upward is enough to trigger it, one stop after another.
Hence the paradox of this floor. The more obvious an expectation, the more it changes what is expected. A forecast stops being an observation and becomes an action.
The Confusion of Tongues in Reverse
On the fifth floor the question changes entirely. It is no longer enough for you to know where the market “should” go according to the news. You need to know what is already built into positioning. Who is in the trade. With what leverage. Where the stops sit. What would force them out. This is no longer a thought about the market. It is a thought about how to think about the market. The blueprint matters more than the brick.
The sixth floor removes the last support. Everyone else knows about positioning too. They watch the same funding rates and the same open interest. They fade the crowd too. So fading the crowd becomes crowd behavior. A contrarian with thousands of followers is no longer a contrarian. He speaks the language of the ground floor, only from a greater height.
The seventh floor turns the legend upside down. In the Bible, the building stopped when the languages were confused. In the market, a model is stopped by the opposite: everyone starts speaking the same language. A successful model spreads, people trade on it, and in doing so they destroy the conditions that made it work. How widely a model is known becomes a variable inside the model itself. This is not philosophy.
It is not a pretty line for a post either. It has been measured, and the number is not small.
In 2016, David McLean and Jeffrey Pontiff published a test of 97 variables that academic papers had shown to predict stock returns. The study appeared in the Journal of Finance. Outside the original samples, portfolio returns were 26 percent lower. After publication, they were 58 percent lower. The authors attributed the gap of 32 percent to trading by people who had read the papers. The readers learned the authors' language, and the signal stopped being a secret. Minus 58 percent after publication.
The Summit That Lost
The best illustration of the whole tower appeared in a newspaper. In 1997, the economist Richard Thaler asked readers of the Financial Times to pick a number from zero to one hundred. The winner would be whoever came closest to two thirds of the average of all entries. The prize was serious. Two business class tickets to North America. There were 1,382 entries.
Now climb the levels yourself. It takes a minute. The first floor picks at random, which averages out to 50. The second takes two thirds of that and says 33. The third knows about the second and says 22. Then come 15, then 10, then 7. At the very summit stands zero. If everyone reasons all the way and knows that everyone else does too, only one answer is stable.
The average in 1997 was 18.9, and the winning number was 13. In 2015, Thaler ran the contest again in the same paper. The prize was more modest. Entries fell to 583. The result barely moved. The average was 17.3. The winner was 12. In eighteen years the tower had not changed.
A noticeable group picked zero or one both times. They solved the puzzle correctly. They assumed everyone else was just as clever. They lost. Another noticeable group picked 22, which by my count put them on the third level. The winner stood between the fourth and the fifth.
The most logical players lost because they stood on the summit. The winners climbed one floor above the crowd and could still hear its language. Not ten floors. One.
Fog Over the Building Site
An honest caveat is needed here, or this text turns into a magic trick. Thaler's contest is a game with a known formula, one deadline and one prize. The market has no formula and no deadline. It has no single prize either. Participants want different things. Some hedge. Some close a quarter. Some just execute an order and ignore price.
Financial Times readers are not a random sample of humanity either. They chose to come and solve a puzzle. People who enjoy that kind of puzzle may climb higher than an average trader on an average Tuesday.
McLean and Pontiff studied American stocks and academic signals. Carrying their conclusion over to crypto and futures is my interpretation, not their finding. Most important, I cannot see other people's positions. Nobody can. Funding rates, open interest and positioning reports are a conversation behind a wall. You can make out the voices but not the words. From the tone alone, a hedge is easy to mistake for a bet.
Cracks in the Masonry
If there is no final model, the trader's task itself changes. This is the eighth floor. Forget understanding the market once and for all. Keep updating a probabilistic model. Not “the market will go up,” but “up is more likely until this happens.” The second half matters more. It tells you when to leave.
On the ninth floor, a trader's strength is not in being right. It is in noticing quickly where the model has stopped matching reality. An experienced mason does not argue with a crack in the wall or explain why it should not be there. He taps the wall every morning and is the first to hear the hollow sound. The sound is more honest than the forecast.
The tenth floor is the hardest. Conviction is both a tool for action and a source of systematic error. Without it you will never press the button. With it you will not close the position once the model has broken. You need to believe in the decision enough to act, and doubt the model enough to abandon it. This is not a compromise. It is two hands. One lays the brick, the other holds the scaffolding.
Life at the Foot of the Tower
This staircase has a downside, and it needs saying, or this becomes a sermon. Climbing is not free. Every floor adds doubt. Doubt eats time. While you sit on the seventh floor reflecting on how everyone knows that everyone knows, the market has already left without you. Price does not wait for conclusions.
Many systematic traders never climb at all. A trend system lives at the foot of the tower. Price moves. The system follows. It needs no theory of expectations. It needs discipline and sizing. Endless reflection easily becomes an elegant excuse for doing nothing. Smart people sometimes climb so high they can no longer come down to the button. Height by itself is worth nothing. What counts is choosing the right floor for the task and changing it in time.
Takeaways From the Foot of the Tower
Price is not an opinion about value. It is the sum of opinions about other people's opinions, and it is recalculated every second of trading. Whoever looks only at value speaks the language of the ground floor and is surprised when the market answers in another.
The obvious is already in the positions. If an idea seems indisputable to you, someone is probably already trading it and waiting for you to buy. Ask yourself not “where will price go” but “who is already in this trade, and what would force them out.”
Someone else's stop is someone else's order. A crowd sure of a move leaves material for the reverse move above and below the market. A map of those orders tells you more than a news recap. News explains the past. Orders wait for the future.
A published edge melts. Academic signals lost more than half their returns after publication, and nobody broke them on purpose. A language everyone speaks stops working for anyone.
The winning floor is one above the crowd, not the summit. Thaler's contest was won twice by numbers exactly one step smarter than the average. The flawless zero lost both times, because the market pays for accuracy relative to people, not relative to a formula.
Look for where your model breaks, not for proof that it works. Proof is cheap. The feed serves it daily. A crack stays silent until the end. Only those who look every morning find it.
A model you share starts to die. Every time you publish a working idea, you teach your language to new people, and sooner or later everyone speaks it. That includes this text.
Nobody will finish the tower to heaven, and that is not a defeat. It is the rule of the game. Many people can climb to the summit. That is logic, and logic can be learned. The harder part is knowing which floor the crowd is on right now and standing one above it without losing its language. The crowd climbs too. So you move. Every day. Which floor are you on right now? The honest answer is not a number. It is one floor above the people you trade against, with a staircase leading down.
This is an essay, not investment advice. There is no signal to buy or sell here, only the structure of the tower on whose floors we all trade. The staircase leads nowhere on its own. Think for yourself.