Somehow my Interdisciplinary mind registered Eugene faster than Fama. After all Eugene Stanley, the father of Econophysics could also get a Nobel. If Psychologists could get the biggest award for Economics, a physicist could have been there too. But then the surprise became bigger, not because it was Fama, not Stanley but because Robert Shiller shared the award.
Data models should work across regions, across nature, across data sets. This means “Data Universality”. If natural phenomenon exhibit universal patterns like geometry, outliers, 80-20 principle, mean reversion, fat tails etc. then the data these natural phenomena generate should also express a similar behavior; actually they do. But we still consider data sets as religious, the stock market data is useful for the financial analyst, while the subatomic data is useful for physicists, the social network data is for marketers.
Why is the stock market not a science? Today many elements of our life have a degree of predictability, consumption patterns, social behavior, earthquakes, etc. However, the predictive measure is lacking when it comes to stock markets. Behavioral finance highlighted this lacking measure and accountability. Even statisticians limit themselves to the prediction of stock market volatility rather than stock market direction.
In 1827, Robert Brown saw a random movement of pollen particles in water. This was called Brownian motion, also the drunkard’s walk. In 1902, Einstein proved this and confirmed the presence of atoms and molecules. This was 100 years after the atomic theory was proposed by John Dalton and was the first attempt to reconcile wave and particle theory. The debate has taken another form, as classical physics can’t be reconciled with quantum entanglement, which meant free will does not work, a particle can’t make its fate by hard work and awareness, its fate was predetermined.
Just like we don’t need to understand inflation for it to trouble us, we really don’t need to be able to spell statistics for it to rule us. The realization of an average lifespan could have pushed many saints towards the spiritual path, but for us simple material investors, our life moves around a statistical average.
The phenomenon in which one regular cycle locks into another is called entrainment, or mode locking. Entrainment explains why stock market components are like flocking birds and herd behavior of land animals
Christmas is about making wishes. However, some wishes are not reasonable. For example, wishing for a universal database is wishful thinking, as such a database would need a lot of server space. I am not speaking of a smart stock market database but a database for every organic data from the stock markets to the stars. Scientists know the limitations connected with cosmic data. What the data astronomers are capturing, on occasion, comes from the past, from a few million years back in time.
Before he died, physicist and Nobel laureate Werner Heisenberg had two questions for God. These were “Why relativity? Why turbulence?”. Heisenberg also felt that God knew the answer just for the first question. Turbulence was beyond God. It’s strange the conviction Heisenberg had regarding turbulence also known as fluctuation, noise, divergence, extremity, fat tail, chaos, black swan, etc.
There is nothing wrong with metals. It is we who don’t have a real perception of them. The regular investor who is so equity-focused, a bit fixed income-focused is a bit aware of gold and oil prices and that’s where it stops. When it comes to commodities or say metals, one has to cross the bridge.
A friend asked me how I could differentiate my wish from my intuition. She made me think, how there was a thin line when it came to defining what we wish and what we assign a certainty, too; an intuition. The human thinking was based on subjective patterns, which either we understood (intuition), or wished to comprehend.