virus: Re: Randomness of Markets

Duane Daniel Hewitt (
Tue, 4 Jul 1995 14:51:11 -0600

On Tue, 4 Jul 1995, David McFadzean wrote:

> Do you think predicting the market is more like flying or more like
> predicting the weather? Predicting the weather is theoretically
> impossible due to non-linear dynamics. No amount of technology or
> future scientific knowledge is going to change that (unless we become
> God).

I would agree that it is more like predicting the weather but in a
different way. Weather can be predicted with some degree of accuracy in
the short term but the forecast is less accurate the longer the time
frame examined. I think that the markets exhibit the opposite behaviour.
They are unpredictable in the very short term but patterns may be
recognized that have longer term implications. (eg Government debt,
market manias).

How much refinement of weather forecasting has there been over the last
several decades? Over the last few years? Would a model such as the one
presented at Extro by Bart Kosko work to predict the weather. Not
definitively but with a usable degree of accuracy.

> >I do not think that people like Warren Buffett, Sir John Templeton and
> >Peter Lynch are just lucky. If it was luck then how many billionaire
> I didn't mean to say it was just luck. I am claiming that there are probably
> other investors that are equally as knowledgable but aren't billionaires.
> There is an element of chance you can't ignore. I think Bill Gates is
> lucky in the same way. Sure he had the skill to take advantage of the
> luck, but there are many others who are more skilled and less rich.

Here we are running into a fundamental premise of mine. That reality is
just. Opportunities may occur by chance or luck but the skill and effort
required to make them real are not luck. There are probably many
opportunities to become billionaires that are overlooked every day. BTW I
think Idea Futures is such an opportunity. Does this throw my revenue
projections off? :-)