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>> The markets are kind of like a massive, distributed, realtime, ensemble, recursive predictor that performs much better than any one of its individual compone
by epiphanitus 7y ago
>> The markets are kind of like a massive, distributed, realtime, ensemble, recursive predictor that performs much better than any one of its individual component algorithms could.
That's really interesting, I never thought of it that way.
>> markets work by polling the expertise of many different parties who all understand a piece of how things should be valued.
Does the whole picture ever become apparent to all of the interested parties after the fact? Or do market movements remain subject to a high degree of interpretation even after they happen?
- 1e-9 7y agoNobody has the whole picture. I would say that the more extreme an individual event is, the easier it tends to be to understand in retrospect. This depends greatly upon one's analytical sophistication, level of market data, fundamental product understanding, and professional network (to know what happened in other firms).
- raxxorrax 7y agoIf nobody has the whole picture, how can we be sure if it's beneficial? edit: Or asked differently: What do we have now with high frequency trade established compared to the situation before?
- growse 7y agoIt's enormously cheaper to do business on markets nowadays. Back in the old days, spreads were sometimes multiple dollars on human-made markets with a lot of inventory. With HFT, people compete to offer the best market, and spreads are in the pennies.
- deleted 7y ago[deleted]
- FabHK 7y agoThat argument is basically Hayek's (and Mises's) answer to the economic calculation problem. Hayek argued (in "The Use of Knowledge in Society") that free markets are better than centralised planning, because of dispersed knowledge. https://en.wikipedia.org/wiki/Friedrich_Hayek#The_economic_calculation_problem https://en.wikipedia.org/wiki/Friedrich_Hayek#The_economic_c... https://en.wikipedia.org/wiki/The_Use_of_Knowledge_in_Society https://en.wikipedia.org/wiki/The_Use_of_Knowledge_in_Societ...