61–70 of 90 posts
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Shares do actually have a fundamental value, based on their lifetime dividends, buybacks and liquidation. So unlike, say, Bitcoin or the Dollar, there is something to be gained from knowing the zeroth-order reality.
Disagree. Think about what makes a share liquid: lots of potential buyers (i.e. people perceiving it as a safe investment).
Earlier quoted context omitted.
Shares do actually have a fundamental value, based on their lifetime dividends, buybacks and liquidation. So unlike, say, Bitcoin or the Dollar, there is something to be gained from knowing the zeroth-order reality.
Disagree. Think about what makes a share liquid: lots of potential buyers (i.e. people perceiving it as a safe investment).
You don't need lots of potential buyers for liquidity, only one for what you're trying to sell. It's why very low volume secondary markets can function and provide liquidity.
A lot of people will also obviously invest into things even when they do not consider them safe investments. If the potential return is thought to be high enough, large numbers of people will routinely invest into unsafe investments with full awareness that it's at least somewhat dangerous (whether stocks, crypto, real-estate, schemes, etc).
Let's look at another toy example, using made-up numbers: Q: Is the earth flat? Yes: 10% No: 90% Q: What do you think most people will respond to that question? Yes: 3% No: 97% Analysis: Yes: 10% - 3% = 7% No: 90% - 97% = -7% Conclusion: The earth is flat, I guess ;)
A more realistic example of that would be: Q. Is the earth flat? Yes: 0.1% No: 99.9% Q: What do you think most people will respond to that question? Yes: 10% No: 90% Analysis: Yes: 0.1% - 10% = -9.9% No: 99.9% - 90% = 9.9% Conclusion: the earth is not flat. Not sure where you're getting the "10% believe the earth is flat" from, but if that's just your guess then it's pretty reasonable for people to say they think 10%…
I'm not sure, that "yes" imply that the asked person believes that Earth is flat. I probably would be confused if someone asked me such a dumb question (why?), and I answer "yes" to make situation to be obscure not just for me.
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Nope. That is overconfidence of the ignorant, and this is dealing with trusting the high confidence of the correct. It doesn't really matter here that people answered incorrectly.
I don't think so. It's not saying anything about how highly confident the correct are. It's about how they know that most people are incorrect. It's about misconceptions. There is this core part of the unpopular-but-correct answerers that knows that the incorrect answer is popular. The larger this core part is, the higher the "score" of the "surprisingly popular" answer is. It's about finding something that is "mista…
Saying that you believe the popular option is different to yours is a display of high confidence in your own answer, and low confidence in other people's knowledge.
Dunning kruger only deals with highly confident wrong people, which isn't the interesting group in our surprisingly popular measurements.
Bringing dunning kruger in to it would make more sense if there was an "im not 100% confident" option, but instead it was an absolute dichotomy.
It doesn't really mean that all of the people answering incorrectly are completely confident and therefore are dunning krugering. Someone who is not overconfident at 60% confidence adds the same "yes" data point that someone who is 100% confident and wrong does.
How does this play out in the stock market?
Perhaps the number of bets is analogous to what people believe, while total money bet is analogous to what people think others believe. If so, the surprisingly popular answer is the one with the smallest average bet.
The obvious analog in the stock market is average order size, but this isn't a generally-available statistic, and it's not clear to me whether it would be meaningful.
Volume (shares traded per time unit) is closely-watched, however, and several technical analysis "indicators" compare price changes to volume.[1][2][3][4]
High liquidity is a state of relatively small price changes per unit of trading volume. It generally means traders are not paying large premiums/discounts to previous trades. In a way, this corresponds to a smaller bets on future returns, and thus, to surprisingly popular returns...
[1] https://en.wikipedia.org/wiki/Ease_of_movement
[2] https://en.wikipedia.org/wiki/Force_index
[3] https://en.wikipedia.org/wiki/Volume-price_trend
[4] There are similar concepts in modern portfolio theorgy, such as Amihud illiquidity.
The capital is not Philadelphia, it's Harrisburg. So the idea must be that most people think they are right and others will agree with them, but there are people who get it right and know that others get it wrong, and they are responsible for the difference in scores.
There are four groups of people: A - "Philadelphia is the capital, and others will agree." B - "Philadelphia is the capital, but most others won't know that". C - "Harrisburg is the capital, and others will agree." D - "Harrisburg is the capital, but most others won't know that." This technique eliminates groups A and C from consideration, and measures the difference in size between groups B and D. Both groups B and…
Earlier quoted context omitted.
Disagree. Think about what makes a share liquid: lots of potential buyers (i.e. people perceiving it as a safe investment).
> Think about what makes a share liquid: lots of potential buyers You don't need lots of potential buyers for liquidity, only one for what you're trying to sell. It's why very low volume secondary markets can function and provide liquidity. A lot of people will also obviously invest into things even when they do not consider them safe investments. If the potential return is thought to be high enough, large numbers of…
Earlier quoted context omitted.
Disagree. Think about what makes a share liquid: lots of potential buyers (i.e. people perceiving it as a safe investment).
If you were offering a long period of healthy dividends for a good price, I wouldn't care if I could sell it.
The capital is not Philadelphia, it's Harrisburg. So the idea must be that most people think they are right and others will agree with them, but there are people who get it right and know that others get it wrong, and they are responsible for the difference in scores.
There are four groups of people: A - "Philadelphia is the capital, and others will agree." B - "Philadelphia is the capital, but most others won't know that". C - "Harrisburg is the capital, and others will agree." D - "Harrisburg is the capital, but most others won't know that." This technique eliminates groups A and C from consideration, and measures the difference in size between groups B and D. Both groups B and…
* Do you think Trump will win the US Presidential election?
* Do most voters think Trump will win?