My dad wanted to be buried in a pine box on a hillside.  Our friend Kim did it.

A “natural burial” puts nothing between the deceased person and a return to dust. No embalming, encasement, metal, vaults. Just wood and time and dirt.

Kim chose it for herself. She departed as she lived, genuine and real. Our friend Suzanne said, “I think I want to be buried that way.” 

We’re all prisoners of time. We control only how we use it. We can’t even choose how we’ll be remembered because it’s not up to us. 

I’ve no intent today to write about what death and markets have in common! I write about market structure – the mechanics of the market. I’m reflecting on what’s genuine. What can you believe and know?

The stock market is not wood and dirt. It’s a bunch of servers in data centers in New Jersey powered by the fastest and most powerful computational capability the world has ever known.

I don’t know if AI will eclipse the plumbing of stock markets because AI has been part of it for awhile. Mechanical manifestations abound.

One that’s now in 2026 repeating routinely is the zeroing out of the gap between positive and total change. 

Before you check out, let me explain. 

The stock market must be driven by something. A behavior. Or more than one. We measure four big ones: Active, Passive, Quants, Hedge Funds.

There are other ways to think about the stock market, sure. This is just one. We derive it from transactions behind prices and volume.  That is, when we measure each of those and add them up, it’s 100% of whatever is occurring.

We net them by adding up what increases and subtracting from that what decreases.

There’s a great song by Toad the Wet Sprocket, one of my favorites from youth, whom we saw again at the Denver Botanic Gardens last summer. The song is “Something’s Always Wrong.”

It gets in your head.  Be warned.

In the stock market, something’s always there, not wrong. We measure behavioral change, net and positive. Negative numbers signal declining flows, and vice versa.

It’s central to knowing what sets price, what kind of money is rising or falling, or if patterns show anomalous disruption.

Then we measure standard deviation between the total and the net.  Why? Rate of change. We are into stuff like that here at ModernIR.

It’s all about what’s real. 

Recently we watched some of the Hunger Games movies from a decade or more ago, starring Jennifer Lawrence and Liam Hemsworth. In the last of the series, two characters – I don’t want to give it away – say, “Real or not real?”

Hold onto that thought. By the end you’ll get it.

So in these patterns, standard deviation is going to zero between positive and net change. It’s not impossible at all. But it should be rare.

Say you added up all the clapping of everybody at a concert by Toad the Wet Sprocket and you subtracted the non-clappers, and you found that the standard deviation between the two was…

Zero.

Would you go, “That does not seem real?”

Increasingly in recent weeks, the rate of change in behaviors has a standard deviation of zero. So then. How do stocks rise? Or fall?

The stock market RIGHT NOW works on a spread between the bid and offer. That rule is in doubt. The SEC has proposed to eliminate the so-called “Order Protection Rule” requiring stocks to trade there. To know more, read this from Sifma.

It was a terrible idea in the first place. I’m all for scrapping it.

However.

It’s foundational to the stock market.

Machines can calculate that a stock with a bid to buy at $20 and offer to sell at $20.01 can be counted on predictably to rise more than one penny ONLY if inflows exceed outflows.

And a machine will thus buy from the seller at $20.004, and sell to the buyer at $20.006, taking $0.002.

The buyer paid up a little, the seller sacrificed a little.

An algorithm crosses that spread because it predicts a trend of fractional seconds. This is how Citadel, Jane Street, Susquehanna, Hudson River Trading, made $100 billion combined last year in stocks.

There’s big money in tiny spreads.

The oddity? Beyond the scope of horizons machines pursue, the market lacks any bias. The standard deviation between positive change and total change is zero.

I don’t know if it’s bad or good. Only that it’s not happened like this before. 

But.

I’ve long wondered what would happen if we filled the market up with things derived from stocks: ETFs, options, leveraged bull/bear ETFs, the swaps underpinning those. So that the net balance of derivatives was greater than assets.

Maybe the answer is that standard deviation between total change and net change goes to zero. 

Perhaps it doesn’t matter.  But investors, you’d better understand the market you’re invested in. We have that data.

And public companies, you need to know what’s real. We have that data too. You can’t navigate a market you can’t measure.