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I think their point is that predicting that "the stock will go up by 1$" or "the stock will go down by 1$" is worse than "the stock will go up by 0.05%" and "th
by colinchartier 8y ago
I think their point is that predicting that "the stock will go up by 1$" or "the stock will go down by 1$" is worse than "the stock will go up by 0.05%" and "the stock will go down by 0.05%" because of this little paradox:
50$ increase from 50$ is 100% increase
50$ decrease from 100$ is 50% decrease
e.g., if the model finds 50$ increase/decreases, that actually corresponds to very different wealth changes