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| TheRumpledOne 6,529 posts msg #78851 - Ignore TheRumpledOne modified |
9/9/2009 7:17:42 AM THE ILLUSION OF CONTROL "Individuals appear hard-wired to overattribute success to skill, and to underestimate the role of chance, when both are in fact present." [Langer, E. J., The Illusion of Control, Journal of Personality and Social Psychology 32 (2), 311-328 (1975)] FINANCIAL MANAGEMENT "After a full cycle of rise and fall after which stocks were valued just where they were at the start, all his clients lost money (Don Guyon, 1909). Many academic works suggest that most managers underperform "buy-and-hold" strategy; persistence of winners is very rare, etc. Most funds consistently fail to overperform random strategies (dart throwing)." OVER-OPTIMIZATION Rats beat humans in simple games People makes STORIES! "Normal people have an "interpreter" in their left brain that takes all the random, contradictory details of whatever they are doing or remembering at the moment, and smoothes everything in one coherent story. If there are details that do not fit, they are edited out or revised!" (T. Grandin and C. Johnson, Animals in translation (Scribner, New York, 2005) http://www.er.ethz.ch/presentations/Illusion_of_control_Zurich_CCSS-conf19Aug08.pdf .......................... The rat will beat you if you do not understand this. |
| TheRumpledOne 6,529 posts msg #78888 - Ignore TheRumpledOne modified |
9/9/2009 5:01:37 PM How to Smell a Rat: The Five Signs of Financial Fraud (Fisher Investments Press) by Ken Fisher & Lara W. Hoffmans  |
| TheRumpledOne 6,529 posts msg #78978 - Ignore TheRumpledOne |
9/10/2009 6:52:46 PM http://www.tradingmarkets.com/.site/forex/how_to/articles/The-4-staples-of-Interpreting-Price-Action-77799.cfm |
| TheRumpledOne 6,529 posts msg #78979 - Ignore TheRumpledOne |
9/10/2009 6:55:33 PM Learn, Unlearn, and Relearn By: Marcia Conner The secret to learning new things is to be willing to unlearn--even if your behaviors previously brought success. http://www.fastcompany.com/resources/learning/conner/022706.html |
| JCastellon 26 posts msg #79106 - Ignore JCastellon |
9/12/2009 2:29:45 AM what are some good BUYZONE stocks? |
| TheRumpledOne 6,529 posts msg #79120 - Ignore TheRumpledOne |
9/12/2009 1:34:16 PM http://www.fx360.com/commentary/brad/1920/trading-psychology-recency-bias.aspx |
| TheRumpledOne 6,529 posts msg #79121 - Ignore TheRumpledOne |
9/12/2009 1:34:38 PM what are some good BUYZONE stocks? AAPL RIMM |
| TheRumpledOne 6,529 posts msg #79126 - Ignore TheRumpledOne modified |
9/12/2009 4:44:35 PM Rats beat Yalies: Doing better by getting less information? Louis Menand's review of Philip Tetlock’s book “Expert Political Judgment" makes the point that in "more than a hundred studies that have pitted experts against statistical or actuarial formulas, ... the people either do no better than the formulas or do worse". Menand suggests that the experts' downfall "is exactly the trouble that all human beings have: we fall in love with our hunches, and we really, really hate to be wrong". Tetlock puts it like this (p. 40): "the refusal to accept the inevitability of error -- to acknowledge that some phenomena are irreducibly probabilistic -- can be harmful. Political observers ... look for patterns in random concatenations of events. They would do better by thinking less." Tetlock suggests that humans perform worse in this experiment because we have a higher-order, more abstract intelligence than rats do: "Human performance suffers [relative to the rat] because we are, deep down, deterministic thinkers with an aversion to probabilistic strategies... We insist on looking for order in random sequences." Menand, on the other hand, thinks it's just vanity: The students looked for patterns of left-right placement, and ended up scoring only fifty-two per cent, an F. The rat, having no reputation to begin with, was not embarrassed about being wrong two out of every five tries. But Yale students, who do have reputations, searched for a hidden order in the sequence. They couldn’t deal with forty-per-cent error, so they ended up with almost fifty-per-cent error. But why does more information make for worse performance? We're used to seeing evolution develop optimal solutions to such basic problems as choosing where to look for food. So what's gone wrong here? If animals have accurate estimates of how much food is likely to be where -- however those estimates are learned -- then the rule of "[proportioning] their choices in accord with the relative expected rates" is the students' solution, not the rat's solution. The rule says to allocate your foraging time among the alternative locations in proportion to your estimate of the likely pay-off. That's what the students did. But the maximum-likelihood solution is to put all your chips on the option with the highest expected return -- what the rat did. http://itre.cis.upenn.edu/~myl/languagelog/archives/002700.html =================================================== The question is how many traders reading this are TOO STUBBORN to apply this new information? I would wager more traders will cling to their "squiggly lines" than admit the rat will beat them and trade like a rat. |
| TheRumpledOne 6,529 posts msg #79129 - Ignore TheRumpledOne modified |
9/12/2009 5:31:23 PM "Rats lay down urine trails (visible under blacklight). Like Hänsel and Gretel they only need solve the problem once. Planaria lay down mucus trails to the same end." Mon 7 Jul 2008 Rats and Monkeys Beat Pundits and Yalies On our latest Bloggingheads.tv chat, George Johnson and I riff on Chris Anderson’s WIRED essay “The End of Theory.” One of the essay’s implications is that dumb, number-crunching computers can do better than theory-guided human experts. This idea reminds me of a 2005 review by Louis Menand of the book “Expert Political Judgement,” by Philip Tetlock, a Berkeley psychologist. Tetlock carried out a 20-year study of the ability of 284 experts in politics and economics to make predictions about current affairs. The experts did WORSE than random guessing, or “dart-throwing monkeys,” as Tetlock puts it. Tetlock also cites an experiment at Yale in which rats seek food in a maze. Food was placed on the left side of a fork in the maze 60 percent of the time; otherwise, the placement of the food varied randomly. After figuring out that the food was on the left side of the fork most of the time, the rats turned left every time and so were right 60 percent of the time. Yale students, discerning illusory patterns of left-right placement, guessed right only 52 percent of the time. Yes, the rats beat the Yalies, just as monkeys beat the political pundits. Followup experiments showed that these disturbing findings do not hold for science journalists who graduated from Columbia. http://www.stevens.edu/csw/cgi-bin/blogs/csw/?p=167 ============================================================ |
| JCastellon 26 posts msg #79145 - Ignore JCastellon |
9/13/2009 6:14:03 PM thanks! |
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