Welcome To The 300 Club HUB On AGORACOM
We may not make much money, but we sure have a lot of fun!
Message: have you tried psychohistory?
Your Vote:
Did you know?
You can earn activity points by filling your profile with information about yourself (what city you live in, your favorite team, blogs etc.)
I wouldn't lay claim to being a great stock picker, in fact my approach is fairly conventional - Stan Weinstein for trades, Ben Graham for investments. I don't think you can improve much on that frankly. Those guys wrote the book(s). What I was referring to has more to do with a theory of economics, or more to the point, how we lack a formal theory with truly predictive qualities such as you'd find in chemistry or physics. I'm curious to know why that is - what it is that prevents us from developing a working model that on the face of it should be fairly straightforward, at least compared to the puzzles of science which took centuries to unravel.
A lot of my work in the 80's had to do with human cognition and how it affects our understanding of phenomena - the interaction of the observer with the system being observed, both at the micro scale where the methods of investigation disturb the system in some way, and at the macro level, for example in anthropology, where the presence of the anthropologist affects the behaviour of the people being studied.
To sum it up in one phrase, why do we believe the things we believe? What influences, cultural, material, psychological and so forth, inform our way of thinking, and how does this determine our interaction with others, and with the material world? More importantly, can we escape these boundaries, or are we forever doomed to repeat the same patterns?
It's fairly easy to see how this applies to economics, but not so easy to get at the root of it. Von Mises made a good start with Human Action, but there's a lot he couldn't cover owing to the time in which he lived. What is the effect on economic policy, for example, of instantaneous information retrival, such as you see with the internet today? For example, how does this influence the behavior of central bankers, who previously only had to concern themselves with a limited number of information channels (newspapers, radio) most of which they were able to control via political or other means. Or take another example, the difference between war reporting in WWII, and the Vietnam War. How did the differences in style and motives, and the media channels involved (TV vs Radio) affect the viewpoint of the folks at home?
Obviously this branches into a study of media, and what effects the various media have on our decision making. It's a long road from tipsters in 1920's bucket shops to CNBC money honeys for example. The mere fact of near total involvement of the public today compared to then is another aspect of the phenomena that receives very little attention.
I could go on (and on, and on...) but that basically sums up what I look at when analyzing "the markets." For me, the markets are a microcosm of human behaviour, which is how Von Mises viewed it, so you have to start with human behaviour, which is informed by perception, which leads to a study of cognition and the question of why we believe the things we do.
Does that clear anything up, or do I just sound like some muddled academic who dabbles in stocks?
ebear
it sounds like you're getting into areas of psychology, sociology and anthropology, of which i know very little. as far as the effect of the internet, it looks like the flow of information, along with everything else, is going much faster these days. in ancient times, news would circulate by means of coins bearing the image of a new emperor finding their way through commerce to far-off provinces. in recent (pre-internet) times people got around state control of media by covertly circulating tape cassettes with revolutionary information. the pace is continuing to accelerate from the days when television brought the viet nam war into living rooms, and turned public opinion against it.
the internet provides freedom, so it has to be regulated in totalitarian states; this saddles a country like china with a competitive disadvantage, since it has to censor opposing views, and places limits on the free exchange of information. in western countries, alternate views are allowed now, or we would never have heard the views of gata or any other hard money advocates..
but when you try to predict human behavior, you are getting into the realm of science fiction. i like the treatment of isaac asimov's foundation series, in which a mathematician developed the equations to predict human behavior, which he called psychohistory. he couldn't predict the behavior of individuals, but statistically he could predict the behavior of an entire population, i.e. mob psychology.
if it really were possible to predict human behavior, marketing executives and political strategists would have found a way to do so by now, whether to sell us toothpaste or political candidates. but if you make any progress on psychohistory, let me know. it sounds like an interesting field of study.
Loading...
Loading...
New Message
Please
login
to post a reply