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Pastimes : The Naked Truth - Big Kahuna a Myth
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To: Stefan who wrote (45174)6/4/1999 6:34:00 PM
From: BGR  Read Replies (1) of 86076
 
Stefan,

First of all, the data, indeed is quite random (it has some auto-regression and seasonality effects, but that is adjusted for). Next, the index is not always balanced on a monthly basis. Finally, given that, the first few lines of the URL that you have provided points out the weakness in your analysis (which a priori rejects short term trend). I quote:

People often talk about the Law of Averages. Usually, they are referring to something like the law of large numbers. That is, they mean that everything will eventually
"average out" or "what goes around, come around".

But: usually people feel that this averaging out will happen very quickly. This is just wrong, sorry!

Look at the coin flipping graphs again, it can take a long time for something simple to exhibit long run tendencies.

-BGR.
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