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Scary 1929 market chart gains traction

marketwatch.com

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Re: Scary 1929 market chart gains traction

#41

Post by dllthomas »

hartator wrote: post #21

If you look hard enough, you will always find correlation between stuff. Never forget that's correlation doesn't imply causality!

Correlation does imply causality, but:

    1) it doesn't (alone) tell you what sort
    2) it takes quite a number of examples to be very certain of anything
    3) you have to be weighting counter-examples correctly, too
    4) you shouldn't forget your priors

Re: Scary 1929 market chart gains traction

#42

Post by dllthomas »

drcode wrote: post #3

Yeah, patterns like this are much easier to find than you'd think and don't have any predictive value. Yes, the market could take a dive (or shoot upwards) any time, but not because of the pattern in this chart.

It would be because of the pattern in this chart IFF it spooked enough people. Unlikely.

It could be because of the same things as caused it in 1929 - the pattern in the chart is (extremely weak) evidence of similarities, and so we probably should up our estimates of that likelihood by some epsilon - but (without rigorous analysis) the appropriate epsilon is probably small enough that it's below the precision available to human reasoning. Ignore it or investigate further, don't do anything based on this.

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