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As someone who watches the financial news, it almost feels more like baseball statistics, where they say something like, "this batter on sunny days in April has
by cbanek 7y ago
As someone who watches the financial news, it almost feels more like baseball statistics, where they say something like, "this batter on sunny days in April has an advantage against left-handed pitchers."
While it may be true, it feels more like p-hacking than some kind of useful fact.
I felt like the financial industry was really doing this early in 2019, after the huge drop in stocks, everyone was like the S&P is up 20% this year already (forgetting to mention it was down a huge amount in December and ready for a comeback).
Of course how you frame these numbers and which numbers you pick is part of the reporting. When taking numbers of out of context, I think it can get a little sensationalist.
- c256 7y ago> As someone who watches the financial news, it almost feels more like baseball statistics... If you hear a loud banging noise, don’t buy?
- snoshy 7y agoGP's point is that someone predicting a bang based on increasingly obscure and cherry-picked data does not in fact reliably predict a real bang in the future.
- smabie 7y agoAccording to EMH, all information is subsumed into the price. As such, how could the huge 2018 Christmas drop affect future returns?
- barbecue_sauce 7y agoMaybe EMH isn't correct?
- hamilyon2 7y agoWeak forms of EMH are almost certainty correct. If they were not, you could beat passive investing with relatively little work, and that is impossible.
- VHRanger 7y agoStatistically it's not incorrect. While you should be skeptical of strong forms of the EMH, all evidence points to weak forms of the EMH being true. A corrolary that is good to keep in mind is "markets are more efficient than you're smart" -- prevents you from starting doomed financial enterprises
- perl4ever 7y agoHow could there be a huge temporary drop, with your view of the EMH? The fundamentals can't have changed that much. If they did change that much, and the market absorbed new information, then the price wouldn't have come back. The only way you can retain a belief that the price is "correct" is by imagining there are invisible error bars somewhat bigger than the size of the fluctuation.