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| We must assume that we can never incorporate all of the necessary independent variables into any model to make it useful for predictions very far into the future. Just look at a recent example of scientists making claims about how good they had the climate models. The claims were that the models were based on PHYSICS, and that with rising CO2, temperatures *had to* rise with the CO2. If you read the scientists own words that were making these models, you would have thought that they really had it figured out. Well, modeling a coupled, non-linear chaotic system will be frustrating. And markets are also coupled, non-linear chaotic systems. Just as someone who uses multiple inputs to curve fit a model to historical price data and expects it to predict the future will be unpleasantly surprised when he actually bets money on that model, climate modelers are now having to live with the same frustration as those model finally get enough real time running to show how inadequate they are. The big difference is that climate modelers still get paid (with our tax money), while those of us who bet on our own models often don't. | |
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Bulls vs Bears
