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Strategies & Market Trends : The Millennium Crash

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To: Staff who wrote (1601)	11/15/1997 5:02:00 PM
From: Cage Rattler	Read Replies (3) of 5676

Staff: Follow-up; not much change in thinking. Rephrasing your question - given ten consecutive coin tosses and the first eight consecutive tosses being heads, what is the probability of the ninth toss turning up a tail? Assuming true randomness, the chance of a tail on toss nine is exactly the same as that of a head, or «. The attractive fallacy, or maturation of odds, follows the "logic" that since the probability of eight consecutive head tosses is so low (1/2) raised to the 8 power) a tail must be getting more probable. Not so, at least in probability theory. Nevertheless, this concept seems applicable to investment strategy. When a gambler/investor bets, based upon the maturation of odds fallacy, and is willing to pay for and assume unfavorable odds, the opposite investment position will payoff over time. Ciao, Ted

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