tiistaina, syyskuuta 09, 2008

The problem of forecasting economy

The problem of forecasting things like future prices of different things (stocks, basic commodities, what not) is difficult especially because if you know how to forecast the changes, then you can figure out a way of making money using that knowledge. By making that money you will change the prices today and thus the information will be in todays prices and again you cannot forecast the future movements.

The only things that current prices do not forecast are the unpredictable, the black swan. And by definition, the unpredictable is not predictable - and once it becomes such, it becomes aggregated to today's price information.

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