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Memoirs of Extraordinary Popular Delusions and the Madness of Crowds (1852)

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Re: Memoirs of Extraordinary Popular Delusions and the Madness of Crowds (1852)

#41

Post by w10-1 »

IAmGraydon wrote: post #21
smallmancontrov wrote: post #5

Earlier quoted context omitted.

Oh, yeah, that's cooking lol: https://fred.stlouisfed.org/series/BOGZ1FL663067003Q Speaking of which, I noticed that the big market reversal during the beginning of the Iran war happened right around when ESLR requirements were due to relax. Is this a transmission mechanism for that? Did some of the big brokerages run a big promotion (0% APR on margin debt!) or something?

That chart (and many from FRED) is unfortunately not useful without viewing it on a logarithmic scale. Things can look quite parabolic in a linear space, but exponential growth is quite normal in many financial contexts. Click "edit graph" and change units to "natural log". Now look again. You'll see that the growth in margin loans is absolutely normal, and actually has only recently recovered from the dip caused by…

> change units to "natural log"

Great tip, but I didn't see "natural log" specifically. Perhaps "Compounded rate of change" is most applicable? That's still mostly above 0 historically, indicating margin usage is ever-increasing. The helpful graph would be margin usage as a weighted percentage of market participation.

Re: Memoirs of Extraordinary Popular Delusions and the Madness of Crowds (1852)

#42

Post by WheelsAtLarge »

wduquette wrote: post #8

Excellent book. The high point for me was the enterprising fellow who set up a stall in London during the South Sea Bubble (the original bubble!), allowing people to invest in "An undertaking of great advantage, but nobody to know what it is." People lined up for a couple of days to give the fellow their money...after which the fellow disappeared, never to be seen again. No lies detected!

You all renember SPACs,Special Purpose Acquisition Companies. And all the "experts" who needed the money because they had some great investment that could not be financed any other way. That wave hit its peek less than 5 years ago. Yup, that was a great way to invest. I suspect it happens at every cycle.

Re: Memoirs of Extraordinary Popular Delusions and the Madness of Crowds (1852)

#43

Post by mghackerlady »

lo_zamoyski wrote: post #31
rauljara wrote: post #7

My intro to psychology classes was one of the most valuable classes I ever took, just with the way it systematically shattered my own notion of how much I could trust my own notions of perception and thought to be a rational and accurate reflection of reality. I definitely had a notion of how irrational “people” could be before that, but of course I somehow thought I was above all that.

Human beings are rational animals as such, but our exercise of that rationality can be quite weak and subject to character flaws and bad habits, and requires cultivation to refine, purify, and actualize. Of course, we also must be careful here because you're using your own faculties to judge the content of the psychology class (as were the psychologists who produces the content you were learning). Skepticism falls in…

I personally think of humans as some kind of rational machine. We get input from our thoughts, knowledge, and the world around us and generally get whatever the most rational outcome is. The problem with this is that our input is limited to what we know, our general thoughts, and the world around us

Re: Memoirs of Extraordinary Popular Delusions and the Madness of Crowds (1852)

#45

Post by IAmGraydon »

w10-1 wrote: post #41
IAmGraydon wrote: post #21

Earlier quoted context omitted.

That chart (and many from FRED) is unfortunately not useful without viewing it on a logarithmic scale. Things can look quite parabolic in a linear space, but exponential growth is quite normal in many financial contexts. Click "edit graph" and change units to "natural log". Now look again. You'll see that the growth in margin loans is absolutely normal, and actually has only recently recovered from the dip caused by…

> change units to "natural log" Great tip, but I didn't see "natural log" specifically. Perhaps "Compounded rate of change" is most applicable? That's still mostly above 0 historically, indicating margin usage is ever-increasing. The helpful graph would be margin usage as a weighted percentage of market participation.

Natural log is in there - I just tried it myself. It's the second selection from the bottom in the "Units" dropdown.

Re: Memoirs of Extraordinary Popular Delusions and the Madness of Crowds (1852)

#46

Post by lstodd »

mghackerlady wrote: post #43
lo_zamoyski wrote: post #31

Earlier quoted context omitted.

Human beings are rational animals as such, but our exercise of that rationality can be quite weak and subject to character flaws and bad habits, and requires cultivation to refine, purify, and actualize. Of course, we also must be careful here because you're using your own faculties to judge the content of the psychology class (as were the psychologists who produces the content you were learning). Skepticism falls in…

I personally think of humans as some kind of rational machine. We get input from our thoughts, knowledge, and the world around us and generally get whatever the most rational outcome is. The problem with this is that our input is limited to what we know, our general thoughts, and the world around us

Good question would be: is it rational to act on known-to-be-incomplete data? Is it rational to rely on assumptions?

What readily follows is the question: is it even possible to be rational, or is it a delusion?

Re: Memoirs of Extraordinary Popular Delusions and the Madness of Crowds (1852)

#48

Post by dogscatstrees »

WheelsAtLarge wrote: post #42
wduquette wrote: post #8

Excellent book. The high point for me was the enterprising fellow who set up a stall in London during the South Sea Bubble (the original bubble!), allowing people to invest in "An undertaking of great advantage, but nobody to know what it is." People lined up for a couple of days to give the fellow their money...after which the fellow disappeared, never to be seen again. No lies detected!

You all renember SPACs,Special Purpose Acquisition Companies. And all the "experts" who needed the money because they had some great investment that could not be financed any other way. That wave hit its peek less than 5 years ago. Yup, that was a great way to invest. I suspect it happens at every cycle.

Not sure why you're downvoted. Chamath Palihapitiya was a tome of SPAC heyday.

Re: Memoirs of Extraordinary Popular Delusions and the Madness of Crowds (1852)

#49

Post by ithkuil »

tsunamifury wrote: post #36
_jayhack_ wrote: post #22

Earlier quoted context omitted.

The content on "priming" (significant pillar of the book) has collapsed as part of the reproducibility crisis in psychology. More here: https://replicationindex.com/2017/02/02/reconstruction-of-a-...

As someone who used priming heavily at Google, and its wide use in social networks to billions in revenue. I’m gonna go with the academics trying to take this down are BS. Adam Curtis even suggests lightly that the takedown of priming in academia was paid for to bury its actual effectiveness (and liability by implication)

The reproducibility crisis reproducibility crisis?
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