VGChartz vs. NexGen Wars

[Delusional]

Lingyis said:

Delusional said:

 

Sorry, I can't agree with you. The classes I'm taking is absolutely useful. Using stats to determine if certain events trigger a spurge or crash of a stock market, using hypothesis testing to make claims as to whether gun control actually has an effect in preventing crime, using optimization to work out a schedule's critical path, using financial accounting to determine if a stock is overpriced or underpriced. It's all very useful even if you don't get a great job with it.

 by the way, here a question for you (a serious one): i've always wondered when somebody asks me this question in an interview how i would answer.  say one has "determined" that certain things do trigger crashes.  how can it that knowledge have any predictive value?  you cannot time those events, and you cannot accurately predict how long it takes the market to respond or recover (essentially the criticism of many conclusions in the emerging field of econophysics). 

the only good answer i can think of is that at least you have some mental preparedness for it, but action-wise, there's little you can do.  i'm pretty bad at interview questions though.  can you think of a better answer?

You're right that you can't time the events nor can you predict how long it takes to respond/recover.  But if certain events do happen, since markets are usually efficient (strong, semi-strong, and weak), it's hard for one to consistently earn money (to short it if it crashes).  They may earn it couple times using analysis tools and with luck, but there's no way to earn money every single time.  But if we know normally what trigger things, even if you do not make instant money out of it, you can statistically analyze whether you should worry about it if you plan to invest <1 year, 5 years, 10 years.  The benefit I see is to give you a better position than other investors who do not have that information.  It can't guarantee you will earn lots with that info, but for sure, you should be able to invest in a better performing portfolio with less risk (beta) than the rest of the market, which is filled with casual investors as well.  That's how I would answer it.