Fundamentals: what do they mean to you?

[meanreversion]

Trend following is based on the premise that human behaviour doesn't change. Read "The Great Crash" by JK Galbraith and pretty much everything that happened back then just happened again recently, even down to the top bankers walking away with huge payouts!

 

[meanreversion]

I very much agree with that.

Does this imply that people are destined to lose money?

 

[BSD]

Haha terrible isn't it :clap:
""I learnt during the new economy bubble that people preferred to be told they were right than to be told what would happen. … [P]eople who had not wished to be told they were talking nonsense before the bubble burst did not wish to be told they had been talking nonsense after the bubble burst either. Indeed they did not recall that they had been talking nonsense. Either they had known that it was a bubble all the time or they had been victims of events that could not have been predicted. Frequently the same individual would make both claims. And the same people would make the same false assertions when the credit bubble burst."

That’s John Kay, writing about punditry and its seeming imperviousness to such small matters as being consistently wrong about what’s likely to happen.

What wins acclaim, Kay contends, is one’s television manner, not the accuracy of one’s forecasts. If you look good and sound authoritative, that’s really what matters. And Kay appropriately cites the work of Philip Tetlock, who has found, to oversimplify a bit, that the better known the pundit, the less accurate his or her forecasts.

Several years ago, Jarol Manheim, Susannah Pierce, and I kept tabs on the predictions that self-styled Washington insiders offered on the popular Sunday morning shout show, “The McLaughlin Group” (pictured above). What we found bears out Kay’s point. Most of the pundits’ predictions were either too unclear to be subjected to a truth test or turned out to be simply incorrect — none of which deterred these “inside dopes” from confidently and loudly offering a new batch of predictions week in and week out. In weather forecasting, we realize that achieving accuracy in the short run is impossible, so the local weather show typically has more to do with the personality of the weather(wo)man than with providing a clear and accurate forecast of whether it’s going to rain tomorrow. The same thing holds for political and economic prognostication, though we prefer to pretend otherwise."

http://www.themonkeycage.org/2008/12/post_150.html

I like that, metereology eh !

 

[BSD]

Trend following is based on the premise that human behaviour doesn't change. Read "The Great Crash" by JK Galbraith and pretty much everything that happened back then just happened again recently, even down to the top bankers walking away with huge payouts!

Great read and great man that who was able to see the forest for the trees ! Kennedy later made him his ambassador to India, wrote a good book about that specifically and the Kennedy years in general as well.

http://www.amazon.com/Ambassadors-Journal-Personal-Account-Kennedy/dp/1557780714

 

[meanreversion]

He was a tall dude, I saw a pic of him next to JFK and he towered over him. Must have been 6'8'' or something, as Jeremy Clarkson would say "a waste of height" (this is what he said to Peter Jones on Top Gear).

 

[scose-no-doubt]

It is chaotic at the least. Big things - those black swans - happen that could not be reasonably foreseen, and they're what moves things.

Most recent one I can think of - deepwater horizon.

And if you want to get philosophical about it... quantum theory destroyed laplace's demon...

Don't doubt that but you know that deepwater means short BP. Whats random there. The driving forces of the moves may be random but is the resultant?

 

[arabianights]

Don't doubt that but you know that deepwater means short BP. Whats random there. The driving forces of the moves may be random but is the resultant?

Pretty obvious what to do when deepwater came out, sure.

But you couldn't have gone short the night before in anticipation, unless you'd sabotaged it yourself.

Further you look ahead the more of these events are going to happen and so ultimately it becomes entirely unpredictable.

 

[spreader_legger]

Looks very much like the Business Cycle :whistling

I very much agree with that.

 

[spreader_legger]

No one can predict the future 100% (except perhaps God). One can only try to determine the most probable course of action the economy will take. There are just too many variables to say for certain .... yes this and this will definitely happen. However, same thing applies to technicals .... you find a nice levels, look for confluence etc does not mean price will behave in a way you expect it too. i.e. you can only base your decision based on the most probable course of action. When fundamentals line up with technicals, that improves your odds even more ... ofcourse you may still be caught out

As far as analysts and economists are concerned, they are paid to give opinions. Naturally there is a possibility they will get it wrong, but ofcourse they will then have less chance to justify their 100k pay out. And ofcourse as scose mentioned, banks will often have their own agendas!

P.S to BSD, I don't think Soros and Rogers have yet given up completely on fundamentals!

 

[arabianights]

Rogers would laugh at anyone who thought he traded off technicals