Sunday, October 12, 2008

Numerical Superstition

Money - I know it's so last week, but one must try and keep up. Reading The Sunday Times splash online, I came to the comments at the end. Wayneo from Boston says, 'Next low for the Dow is 7380. If that low does not stop the blood flowing, then next low will be 6350.' There are few things more satisfying than the spectacle of superstition masquerading as knowledge. There is no evidence for Wayneo's assertion. Indeed, this kind of thinking about markets  - I think it was called chartism  - was pretty thoroughly discredited when I was a financial journalist 30 years go. But Wayneo, probably an economist, is hypnotised by the possibility that numbers in themselves have power over the future. In various forms, there's a lot of this kind of thinking around at the moment. It is the purest superstition. You see, prediction, as Niels Bohr so wisely observed, is very difficult, especially about the future.


  1. Dont worry Mr Bryan, Iowahawk will sort out your economical problems.

    The Jim Treacher Porn Debt Crisis:!

  2. >A great truth is a truth whose opposite is also a great truth.<
    Niels Bohr

  3. The fact is most people when asked "is Mathematics a science" will answer "Yes".

    This question and answer tells you all you need to know about the wiring in our heads.

  4. Last night I went a friend's birthday party and was seated (happily, as it turns out) next to a loquacious banker. He has a blog too -- I shall find it somewhere and attach the link. He is not the least bit worried about the Dow and so forth. To him, this was all predictable. He says in 5 years time, all will be well again. He's about to do a blog post on something called "the Monte Carlo effect" which explains it all.

    I was a few mojitos to the wind when he was explaining the market and its vagaries, but he seemed to know his stuff. And he sure wasn't worried; he was the happiest financier I've ever seen!

  5. Susan, its called the Monte Carlo simulation and its at the heart of our current problems (misuse thereof)
    Something that was devised for use in physics not finance.

    Its quite simple, you can't predict the future because the future depends on how you react to it, the future is actually in the present.

    Your chatterbox banker should find a new career.

  6. In other words, past performance is no guarantee of future results. LOL!