Post
Topic
Board Economics
Merits 1 from 1 user
Re: Monkeys: Don't do trend analysis! (with poll)
by
Hydrogen
on 27/08/2020, 13:14:04 UTC
⭐ Merited by mu_enrico (1)
Why does this thing happen? Well, there is a theory called "Random Walk Theory."



Post 2008 financial crisis, there was an attempt made at forensics to distinguish primary causes of the meltdown. One of the observations made during this time was industry standard financial software emulating brownian motion in physics to randomize the future behavior of consumers and markets.

The projected future behavior of consumers and markets being randomized created a type of observational blind spot where some consumers would be projected to buy while others sold. But never in a timeframe where they all bought or sold simultaneously, which would precipitate large market rises or crashes. This led to software utilized in the financial industry being unable to predict the subprime mortgage crash. So it was claimed anyway.

Everything said about random walk theory and related content would appear to be new age ideology of MMT - modern monetary theory.