Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Cage Rattler who wrote (86120)	5/30/2002 5:11:59 PM
From: E. Charters	Read Replies (2) \| Respond to of 116897

So imprinting is a jargon thing. I did use it in a "wrong" way in psyche, admittedly. Some patterns are hardwired in the brain it would seem. This has been seen in hermit crabs as well whose very eyes see other hermit crabs better than other shapes. Random reinforcement may cause neurotic breakdown, where sometimes you drop a food pellet, and sometimes you shock if the lever isn't pressed, when the light comes on. Let me see, at the light you either drop a pellet, OR you shock if they don't press -- sometimes? And then you remove the shock AND the pellet too? That is double reinforcement. What is a poor rat to do? They must press or get shocked. So they press. After a while, no pellet. No shock if they don't. Rat shits in the corner. Light on, press, food pellet. Light on, press, shock. Now that will lead to few presses I will tell you. So you establish that aversion leads to more repeated behaviour than reward. Logically why would this be? Avoidance is a survival mechanism. But energy is in the equation here. If you do useless work that is feedback on the failure of return too. When the rat was pressing and not getting the pellet (s)he was getting negative feedback. But when (s)he was pressing and NOT getting shocked the positive feedback was continuous -- (how would he know otherwise?). So it is no wonder that he continued to press! I suppose you could say there were times the shock was not felt in some cases, but that is hard for the subject to calculate. Precautionary measures may be built into us. After all the equality of shock and food is hard to calculate too. EC<:-}

To: Cage Rattler who wrote (86120)	5/30/2002 6:48:21 PM
From: E. Charters	Read Replies (1) \| Respond to of 116897

Positive reinforcement in the market is there when the subject can make money. If they do not, as in a bear market it is harder to get them to sell short and make money, although as much or more money can be made. Although you need more money, unless you are in a prolonged bull, you can make money on guessing short with the right stocks in the right sectors. It is easier to detect a basket of stocks that will tank, and in the medium term, far more will tank than accrue. But your losses can be "unlimited" or as high as the stock may go in price. This in practice is never more than 100 dollars a share. It has ruined many brokerages though, who as a rule make their living on shorting stock. All promoters short stock. They are never long if they have any brains. First I think it is necessary to see where the market will go over time. So you look at the market in constant dollars. Then normalize theconstant dollar price differences according to the formula diff= (x1-x2)/x2. Then do summa(avg_diff - any_diff)squared/total_number_of_diffs = the "rms" or "variance of the diffs". (x1 is price at day one, x2 is price at day2.) Take all the day to day, week to week, month to month, quarter to quarter differences of the normalized prices, and a group of year to year differences as well. In ten years there are 2000 day to day differences, and also 2000 of each of the other differences. These are your marginal rates of return on selling at the differences. You average these differences. For one difference group ... P = ((avg_diff/rms) +1)/2 P is the probability of an upness on any difference period. It is about .02 of the average price 66% of the time on the NYSE. This is the Shannon probability of upness. So ... F=2P-1 F is the optimal amount of money you should invest in the stock. It is called the optimal wager. EC<:-}