  The purpose of this article is to propose a new "theory," the Strategic
Analysis of Financial Markets (SAFM) theory, that explains the operation of
financial markets using the analytical perspective of an enlightened gambler.
The gambler understands that all opportunities for superior performance arise
from suboptimal decisions by humans, but understands also that knowledge of
human decision making alone is not enough to understand market behavior --- one
must still model how those decisions lead to market prices. Thus are there
three parts to the model: gambling theory, human decision making, and strategic
problem solving. A new theory is necessary because at this writing in 2017,
there is no theory of financial markets acceptable to both practitioners and
theorists. Theorists' efficient market theory, for example, cannot explain
bubbles and crashes nor the exceptional returns of famous investors and
speculators such as Warren Buffett and George Soros. At the same time, a new
theory must be sufficiently quantitative, explain market "anomalies" and
provide predictions in order to satisfy theorists. It is hoped that the SAFM
framework will meet these requirements.
