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People are not that complicated, and there's abundant evidence that physical models of social phenomena have decent predictive power, notwithstanding all the in

People are not that complicated, and there's abundant evidence that physical models of social phenomena have decent predictive power, notwithstanding all the intervening complexity. The argument of statistical physics is not that people are particles, but that the equations we've found good at describing various natural phenomena work in social contexts because those processes tend toward efficiently conserving energy and the like. Same reason many human and animal activities tend toward power-law distributions.

bofadeez 1y ago
You should deploy a quant trading model based on your predictive behavior theory and compound your way to be the richest person on earth. It's not that complicated apparently!
- gsf_emergency_4 1y ago
  I think GP meant to say that people are not that sophisticated. Newtonian physics is not very sophisticated but fortunes have made and broke on deploying it (Roulette, dice, coinflipping etc) statistical physics, otoh, is slightly more sophisticated than the median human so some experts have indeed made money building related models
  - deleted 1y ago
    [deleted]
- jjk166 1y ago
  So you are saying that if there exist quant traders making lots of money off their models, then that would be evidence that human behavior can be accurately mathematically modeled?
  - bofadeez 1y ago
    It's a lot more complicated than that. Eugene Fama might be a good starting point for you. (Spoiler: most PhD level machine learning quant trading funds do not make money. Marcos Lopez de Prado can explain why that is the case: they accidentally invest in false discoveries. It's so pervasive that I often argue it's a numerical analytic proof for EMH. Most quant funds you've heard of are engaged in high-frequency market making, they provide liquidity by continuously quoting prices and earning the bid-ask spread with limited directional risk. It's not behavior forecasting. Something like order flow toxicity has predictive ability for like a few milliseconds.) Something like this does not work: https://www.tradingview.com/v/9Ut0yL2p/ https://www.tradingview.com/v/9Ut0yL2p/ Even if it has a good p-hacked backtest with some parameters, it's not going to work in practice. It's just a novelty by/for academics.
    - jjk166 1y ago
      The question is not "do all quants make money modelling human behavior?" It's "do any quants make money modelling human behavior?"
      - bofadeez 1y ago
        And are there any quant funds that consistently make money? No. It's like professional gambling. Susquehanna actually bets on sports too. Constant losses (hopefully slightly) offset by gains. There's no such as a trader with high accuracy/precision. If you can even edge out 1% (gain-loss) you'll be a billionaire from $0 very quickly. A positive edge is so exceptionally rare, it's like a startup -> unicorn. It would be the equivalent of owning a casino with trillions of dollars being played nonstop. It almost never happens. If there was any fixed analytic solution to behavior then a simple neural network would approximate it quite easily. It's almost all noise with only spurious correlations and misleading patterns that don't repeat.

bofadeez 1y ago

You should deploy a quant trading model based on your predictive behavior theory and compound your way to be the richest person on earth. It's not that complicated apparently!

gsf_emergency_4 1y ago
I think GP meant to say that people are not that sophisticated. Newtonian physics is not very sophisticated but fortunes have made and broke on deploying it (Roulette, dice, coinflipping etc) statistical physics, otoh, is slightly more sophisticated than the median human so some experts have indeed made money building related models
- deleted 1y ago
  [deleted]
jjk166 1y ago
So you are saying that if there exist quant traders making lots of money off their models, then that would be evidence that human behavior can be accurately mathematically modeled?
- bofadeez 1y ago
  It's a lot more complicated than that. Eugene Fama might be a good starting point for you. (Spoiler: most PhD level machine learning quant trading funds do not make money. Marcos Lopez de Prado can explain why that is the case: they accidentally invest in false discoveries. It's so pervasive that I often argue it's a numerical analytic proof for EMH. Most quant funds you've heard of are engaged in high-frequency market making, they provide liquidity by continuously quoting prices and earning the bid-ask spread with limited directional risk. It's not behavior forecasting. Something like order flow toxicity has predictive ability for like a few milliseconds.) Something like this does not work: https://www.tradingview.com/v/9Ut0yL2p/ https://www.tradingview.com/v/9Ut0yL2p/ Even if it has a good p-hacked backtest with some parameters, it's not going to work in practice. It's just a novelty by/for academics.
  - jjk166 1y ago
    The question is not "do all quants make money modelling human behavior?" It's "do any quants make money modelling human behavior?"
    - bofadeez 1y ago
      And are there any quant funds that consistently make money? No. It's like professional gambling. Susquehanna actually bets on sports too. Constant losses (hopefully slightly) offset by gains. There's no such as a trader with high accuracy/precision. If you can even edge out 1% (gain-loss) you'll be a billionaire from $0 very quickly. A positive edge is so exceptionally rare, it's like a startup -> unicorn. It would be the equivalent of owning a casino with trillions of dollars being played nonstop. It almost never happens. If there was any fixed analytic solution to behavior then a simple neural network would approximate it quite easily. It's almost all noise with only spurious correlations and misleading patterns that don't repeat.