May

31

I was browsing the Daily Speculations archive and found this:

10 Things I’ve Learned About Markets, from Victor Niederhoffer

No. 11 is, "All higher forms of math and statistics are useless in uncovering regularities."

Define "higher form". To someone that has just learned basic arithmetic, basic algebra seems "higher form". Does The Chair maybe mean "PhD level" math? Or does he mean that basic "counting" is the only proper way to uncover regularities?

Fazil Ahmed responds:

I think Ralph Vince has explained well, copying from the post:

Certainly in a post-'08 world, quants are out of favor, and for good reason. Most anyone I know who DOES make money in the markets, does so with very simple, robust techniques. Having considered going to quant school, and studied a good deal of it, I finally came to the conclusion that they are simply working with "models." Models of how the world behaves. unlike hard sciences like Physics and such where you can perform a test, come back a year from now, perform it again and get the same results, you don't have this in financial modeling. And I think this is where the quants have fallen short. Models are NOT reality, and they never got down to the bedrock, the reality of what his game is about. Of course it had to fail, and in a large way, at some point. A good rule of thumb is that if I need a computer, if it isn't simple enough to do in my head on the fly in the foxhole after I have been awake for over 100 hours, I can't use it.

Larry Williams comments:

This gets down to there are hard questions: What is the capitol of Montana? Only one answer: Helena.

And soft questions: How many people are in Montana? Varies from hour to hour.

Archives

Resources & Links

Search