The Stock Market

Step right up for 3-card Monte...

Up or DOWn?

UP forever & ever!
0
No votes
Down from now on.
1
17%
Sporadic rize over a long period with many little drops
2
33%
Stabilized at sumthing rezembling the real welth in the market.
1
17%
I dont care. Got no money.
2
33%
 
Total votes: 6

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OlegTheBatty
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Re: The Stock Market

Postby OlegTheBatty » Mon Feb 12, 2018 10:07 pm

Matthew Ellard wrote:
OlegTheBatty wrote:The economy is a dynamic system. Calculus allows dynamic modelling. Way back when, early economists did not have calculus, so modelling dynamism was beyond their ability. Rather than learn the math, they simplified the models to a static system, and the world has been stuck with static modelling ever since (although that is beginning to change).


My economics course's character was more geared towards law. We discussed financial modelling and a big problem was incorporating, what was then, innovate financial products, like trading discretionary trusts, futures options as hedging, option swaps and things like that. As you can imagine, it was not a matter of working out the maths as much as trying to work out what basic parameters you were trying to model. :D


These are financial instruments/processes. They are not economics any more than spending a dollar is. Likely was a lot more useful to you than straight economics would have been.

I would certainly agree that non economist have picked up on buzz phrases like "Laffer Curves" without understanding they need to be modelled first. It does appear to me that Trump's tax cuts and "trickle down effect" are something he just did, with no modelling first, at all. To me, that is negligence of a high order, but he was voted in....so be it.


Yeah, when you get to what is fed to the unwashed masses. It's no wonder that people like Bobbo throw up their hands in despair. The link between economic gobbledegook and power politics means vast quantities of often contradictory streams of unadulterated, unpasteurized BS.
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Tom Palven
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Re: The Stock Market

Postby Tom Palven » Mon Feb 12, 2018 10:20 pm

OlegTheBatty wrote:
Milton Friedman, the hero of the Chicago School and of libertarians everywhere, is on record as espousing the tenet that it doesn't matter if a model corresponds to reality, it matters if it looks elegant.


Can I assume that Friedmand was being sardonic?

Btw, he was more a hero to conservatives while his son, Professor David Friedman, is more a hero to people calling themselves libertarians or individualists (me, for instance).
https://www.amazon.com/Machinery-Freedo ... of+freedom

I love David Friedman's powerful book, but think that it's a shame that he chose to use the term "capitalism" instead of free enterprise since "capitalism" has now become associated with crony capitalism and and socialism and bailouts for the rich, which are a far cry from free enterprise.
Last edited by Tom Palven on Mon Feb 12, 2018 10:28 pm, edited 1 time in total.
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OlegTheBatty
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Re: The Stock Market

Postby OlegTheBatty » Mon Feb 12, 2018 10:23 pm

You can assume anything you wish. Doesn't make it real.
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Re: The Stock Market

Postby Tom Palven » Mon Feb 12, 2018 10:34 pm

OlegTheBatty wrote:You can assume anything you wish. Doesn't make it real.


Your claiming that Milton Friedman espoused plain old BS doesn't make it real, either.

I'd like to see a link to that in context.
If one can be taught to believe absurdities, one can commit atrocities. --Voltaire

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Re: The Stock Market

Postby bobbo_the_Pragmatist » Tue Feb 13, 2018 2:20 am

OlegTheBatty wrote: Yeah, when you get to what is fed to the unwashed masses. It's no wonder that people like Bobbo throw up their hands in despair. The link between economic gobbledegook and power politics means vast quantities of often contradictory streams of unadulterated, unpasteurized BS.

That pretty fair summary........although I do take a bath at least once a year. But "aside" from the truth in that, the point remains that too much of legitimate economics is also BS. Thats why no one gets rich predicting the future...and if a knowledge base is not predict actual outcomes.......then what does it really know?

There are some excellent really simple basics that economics has nailed down, but this distilled common sense is not really useable. I really like Marx and his recognition of the class warfare that necessarily exists between capital and labor. But the "experts" cant agree on whether or not immigration is good or bad for society........I do think immigration is good for capital.......but bad for labor. See Marx in action? Still can't address what is good or bad for "society." I often post: there is no such thing as "society." Only groups of people with similar interests within a society. All the individual interests actually don't aggregated to a single meaningful score. Its always just who benefits, and who gets hosed.
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Re: The Stock Market

Postby bobbo_the_Pragmatist » Tue Feb 13, 2018 5:29 pm

Guest on Max Kieser on Russian TV just said that Thomas Friedman is famous for his comment that the Internet would prove to be no more impactful than the fax machine. He thought it was just a communication tool rather than a basic change in the way business and other affairs would be conducted. fair enough....to conclude that predicting the effect of the Internet of Things is not formally a subject of economic application, but fair as well to think it is. Show the limits of otherwise "great" minds........or in my view, the feet of clay our heros all have.

Was it Greenspan who after the crash of 2008 said he didn't think people would be so short sighted? Something rather silly like that.

And same Kieser show.....the impact of Bitcoin and other cryto-currencies and how its not understood by "economics" at all. Standard economics is based on diminishing returns affecting market issues, crypto-currencies and much of digital anything is based on increasing returns. Again...perhaps its not even a subject economics is supposed to address???

Then right after that on Watching the Hawks (today...you can still catch it) an expert guest reviewing the Trump impact on the Stock Market with the promise of reduced regulations and capital repatriation...yes, it drove the Market Up, but when 3 people in the USA have as much wealth as 60% of the wage slaves....does "standard economic theory" even apply when talking about "the Market?" That may be another way to phrase my main concern: theory is based on all the players being free to act. The truth is: 99% of people are not free to act at all. How valid can any theory be then?
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Re: The Stock Market

Postby Gord » Tue Feb 13, 2018 11:55 pm

Tom Palven wrote:
OlegTheBatty wrote:Milton Friedman, the hero of the Chicago School and of libertarians everywhere, is on record as espousing the tenet that it doesn't matter if a model corresponds to reality, it matters if it looks elegant.

Can I assume that Friedmand was being sardonic?

I think he may have said pretty much the opposite, in his "Essays in Positive Economics", pp.8-9:

...To be important, therefore, a hypothesis must be descriptively false in its assumptions; it takes account of, and accounts for, none of the many other attendant circumstances, since its very success shows them to be irrelevant for the phenomena to be explained.

To put this point less paradoxically, the relevant question to ask about the "assumptions" of a theory is not whether they are descriptively "realistic," for they never are, but whether they are sufficiently good approximations for the purpose in hand. And this question can be answered only by seeing whether the theory works, which means whether it yields sufficiently accurate predictions....

Or, to put it into my own words, "it doesn't matter if a model looks like it will work based on the way it's formulated, it only matters if it looks like it will work based on its accuracy in making predictions".

So a model for predicting heads or tails that looks like it should work but is only accurate 45% of time isn't as good as flipping a coin, which looks like it shouldn't work but is accurate 50% of the time.
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Re: The Stock Market

Postby OlegTheBatty » Wed Feb 14, 2018 12:14 am

Gord wrote:
Tom Palven wrote:
OlegTheBatty wrote:Milton Friedman, the hero of the Chicago School and of libertarians everywhere, is on record as espousing the tenet that it doesn't matter if a model corresponds to reality, it matters if it looks elegant.

Can I assume that Friedmand was being sardonic?

I think he may have said pretty much the opposite, in his "Essays in Positive Economics", pp.8-9:

...To be important, therefore, a hypothesis must be descriptively false in its assumptions; it takes account of, and accounts for, none of the many other attendant circumstances, since its very success shows them to be irrelevant for the phenomena to be explained.

To put this point less paradoxically, the relevant question to ask about the "assumptions" of a theory is not whether they are descriptively "realistic," for they never are, but whether they are sufficiently good approximations for the purpose in hand. And this question can be answered only by seeing whether the theory works, which means whether it yields sufficiently accurate predictions....

Or, to put it into my own words, "it doesn't matter if a model looks like it will work based on the way it's formulated, it only matters if it looks like it will work based on its accuracy in making predictions".

So a model for predicting heads or tails that looks like it should work but is only accurate 45% of time isn't as good as flipping a coin, which looks like it shouldn't work but is accurate 50% of the time.


Yes, and

"The only relevant test of the validity of a hypothesis is comparison of prediction with experience" — Milton Friedman

He may have been tailoring his position to his audience, or it may reflect a changing opinion over time. I don't know which were earlier and which were later.
. . . with the satisfied air of a man who thinks he has an idea of his own because he has commented on the idea of another . . . - Alexandre Dumas 'The Count of Monte Cristo"

There is no statement so absurd that it has not been uttered by some philosopher. - Cicero


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