Author: Bruce Moreland
Date: 18:33:11 06/06/01
Go up one level in this thread
On June 06, 2001 at 17:50:55, Graham Laight wrote: >When all this has happened (say 10 - 20 years), if anyone with inside knowledge >of a stock tries to trade on that knowledge, the signal will be picked up by >everyone almost instantaneously, and the price will adjust to the new >appropriate level. > >The rest of the time, the stock will remain flat. From what I understand, the software you described works by looking at the price of the stock. There are people who believe that if you graph the price of a stock over time, you can predict upward or downward movement. If enough people buy into this, what can happen is the movements occur because they are supposed to. If the tea leaves indicate that the stock is going to go down, people will sell it and the price will go down. If the stock doesn't actually move, the software can't do anything, unless not moving is an indicator that it will go up or down. I think that what you are talking about is software that analyzes reality, and based upon this analysis of reality decides what the stock price should be. As I said, I don't think this is what that software is doing, but let's continue with this. It is certainly true that if everyone believes the stock should be at 50, it will be at 50. The problem is that people's beliefs change over time, because they get new information and have bizarre emotional fits. If fifty weathermen get together and agree that the day looks like it is going to be sunny, it does not mean that the rest of the century will be sunny (or rainy, if you are a contrarian). It means that based upon best evidence, they believe that the weather will be so-and-so for some amount of time. There are lots of people who are company-weathermen, and they analyze the health and future prospects of companies, and they issue reports, and people believe these reports and this influences the price of the stock. This does not stop the price of stocks from going up and down, as there are all kinds of chaotic inputs into the stock price function. If these people change their outlook, a rapid price change can be the result. These people don't quite predict the price. They predict the company's outlook, which is a major influence upon the price of a stock. I think we are in about as much danger of seeing a perfect corporate health predictor program as we are of seeing a perfect weather program. Weather is a bitch, and I expect that corporate health + economic trends + other factors is as much a bitch as the weather. It is already true that prices are influenced to a great deal by what various experts think. I doubt that a proliferation of electronic experts will change this much. However, the people who actually know anything about this aren't likely to hang around the computer chess group. bruce
This page took 0 seconds to execute
Last modified: Thu, 15 Apr 21 08:11:13 -0700
Current Computer Chess Club Forums at Talkchess. This site by Sean Mintz.