Garbage in is garbage out. Market movements are not hermetically sealed, isolated events, based on an algorithm of most likely/least likely.
There is a real inability to maintain profitability- hardly a .000..138 more ......6 experience for capitalism. ----- Original Message ----- From: "Michael Perelman" <[EMAIL PROTECTED]> To: <[email protected]> Sent: Thursday, August 23, 2007 9:21 PM Subject: [PEN-L] the glories of financial engineering > Wall Street has been hiring mathematicians (like Sabri) and physicists to devise > sophisticated computer models to beat the market. Here is Goldman Sachs explanation > about how its fund lost 30%: > Anon. 2007. "The Game Is Up." The Economist (16 August). > "Goldman Sachs ... said that its funds [one of which lost 30%] had been hit by > moves that its models suggested were 25 standard deviations away from normal. In > terms of probability (where 1 is a certainty and 0 an impossibility), that > translates into a likelihood of 0.000...0006, where there are 138 zeros before the > six." > > > > -- > Michael Perelman > Economics Department > California State University > Chico, CA 95929 > > Tel. 530-898-5321 > E-Mail michael at ecst.csuchico.edu > michaelperelman.wordpress.com >
