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Re: Financial Train Wreck For American Consumers & Investors ?
The beauty of statistics that no one really understands is that they ARE based on real people. They are the averages and tendencies of hundreds of millions of people through their most rational and irrational moments with a 5% margin of error. Unless your theory of human behavior is similiar to theories of the behavior of airborne dust particles, there should be a method of predicting it. It just hasn't been found. My guess as to why, is that we've made statistical assumptions about the market that are unfounded. Growth may not even be normally distributed. What would you do if you found out that the mean and the modal growth of companies in the S&P 500 were significantly different from each other in 2005? Shouldn't that be a reason to flip out?
I don't think most people would jump on an esoteric statistical bandwagon even if it proved successful. I'd guess that there are about 200 Ph.Ds. in the US capable of exploring multicolinearity and capable of understanding how it applies to financial advice and failure of mutual funds to give returns above etfs. Atleast 100 of them will be in social/behavioral science.
Check out that link above. The article was written 26 years ago. It's been replicated numerous times, but it's too esoteric for most people to understand or relate to. So people keep following bad advice.
The beauty of statistics that no one really understands is that they ARE based on real people. They are the averages and tendencies of hundreds of millions of people through their most rational and irrational moments with a 5% margin of error. Unless your theory of human behavior is similiar to theories of the behavior of airborne dust particles, there should be a method of predicting it. It just hasn't been found. My guess as to why, is that we've made statistical assumptions about the market that are unfounded. Growth may not even be normally distributed. What would you do if you found out that the mean and the modal growth of companies in the S&P 500 were significantly different from each other in 2005? Shouldn't that be a reason to flip out?
I don't think most people would jump on an esoteric statistical bandwagon even if it proved successful. I'd guess that there are about 200 Ph.Ds. in the US capable of exploring multicolinearity and capable of understanding how it applies to financial advice and failure of mutual funds to give returns above etfs. Atleast 100 of them will be in social/behavioral science.
Check out that link above. The article was written 26 years ago. It's been replicated numerous times, but it's too esoteric for most people to understand or relate to. So people keep following bad advice.
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