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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Maurice Winn who wrote (12968)	1/8/2002 12:18:53 PM
From: pezz	Read Replies (1) \| Respond to of 74559

<<knowing that there are people with multiple mathematics degrees, PhD style, operating .....high speed super-computers . >> Short term trading is an art not a science....maybe? Or maybe the programmers ain't putting the right stuff into said computers. Is their track record any better than the monkeys? Does the monkey theory take into account the spread, brokers commission [ which means that winning and losing are not a 50 50 proposition ] and a realistic scenario of supposing a consistent positive winning percentage over several years and thousands of trades as opposed to the totally unrealistic all or nothing as described? Morever I will suggest that the majority of successful traders use roughly the same principals. If monkey theory demonstrated luck then most all the monkeys would be using different or random stock picking methods. <<We are not too bad at predicting future events based on things which we directly perceive and which are closely allied with our evolutionary history and earlier experiences, >> Unfortunalely an inner evolutionary instinct makes us want to be trend followers. The monkey finds food @ A twice and he's expecting it to be there a third time.Three times and he's sure it's there....He doesn't think it will be there he knows it.Contrast with the desire to take the money and run confuses responses. Of course you might be right. In sucha case I'd rather be lucky than good......Results suggest I'm one or the other. Thousands of trades suggest [ to me any way ] that I'm the latter Of course that's what I wanna believe. No sense playing the game if it's just luck.

To: Maurice Winn who wrote (12968)	1/9/2002 9:20:47 AM
From: Stock Farmer	Respond to of 74559

I have long enjoyed the "monkey post" analogy. There is a famous stock-letter scheme, similarly constructed. Get a million e-mail addresses, and pick 6 different highly volatile stocks. To half a million send "stock A is going to go up" and to the other half send "stock A is going to go down". That's all. A month later send out the "I told you so" letter to the right half with predictions for next month using Stock B. You can figure out the rest, I'm sure. Odds are that 12% of all mediocre mutual funds should beat the average 3 years running, and yet 100% of the funds who beat the average 3 years running claim themselves as superior. And so on. As to people falling into the trap of thinking they are smarter than the market? Because those of us who are smarter than average know it! <VBG> But seriously, take the following assertion: "Stocks of companies exhibiting characteristics X and Y and Z are undervalued". Even if it is true. Once known it must soon become false, and if known to be false then it must become true and so on, converging rapidly to the point where it is no more true than false. As far as your neural-net-predictive thingie? Same deal. All models are wrong, some are merely useful. So perhaps it is in the degree of "wrong" and the direction that we have the opportunity for profit. One must be wrong, by definition then, to be profitable? Hmmm... until such time as this isn't true... Oh, my mind is spinning in loops of recursion... too much for me to contemplate. John