Forum Archive Index - November 2002

["Morgy" <morgy40@xtra.co.nz>]

I think this is one of the main strengths of TA, it measures both the  fundamental investor effect and the human emotional factor and records or more correctly displays these on a graph as the "REAL"  price. The logic is ignored regardless of our desire to correctly predict the future based on facts and figures. Good news or bad news will eventually run there course, it is important ot know at what point of the cycle the market or company is in regardless of the thereoretical facts and act accordingly. As Phaedrus has pointed out simply and consistantly for many awhile, dont buy shares in companies that are in a downturn based on whatever factors, wait until the releavant factors that effect downward price run there course and buy smarter.  

 

Regards

 

Morgy

             

----- Original Message -----

From: Capitalist

To: sharechat@sharechat.co.nz

Sent: Tuesday, November 12, 2002 12:08 PM

Subject: Re: RE: [sharechat] MegaShare Recommendations - A load of ...

quote:It implies that his computer programs can predict the future, or human
actions, which is also a load of bollocks.

 

And this is the crux of the matter in statistical modelling. You cannot predict human action by mathematical means, though modelling can be useful in equilibrium like phases of markets. By its very nature statistical modelling abstracts out the most crucial part of economics - human action.

 

A quote from Mises in Human Action V.1

 

"Logic and mathematics deal with an ideal system of thought. The relations and implications of their system are coexistent and interdependent...Within such a system the notions of anteriority and consequence are metaphorical only..The system itself implies neither the category of time nor that of causality. There is functional correspondence between elements, but there is neither cause nor effect. What distinguished the praxeological system from the logical system is precisely that it implies the categories of both time and of causality."

 

As I frequently say - statistical predictions are futile without knowing their causal identity.

 

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