Huh? The price came back to 1.2 because the SNB was in the mkt. It only traded below 1.2 in smaller venues, where banks who don't have lines w/the SNB traded. Speaking of casinos, I found this article pretty interesting and an example of actual "casino" edge: http://www.theatlantic.com/magazine/archive/2012/04/the-man-who-broke-atlantic-city/8900/ Not sure if this link's been mentioned already earlier in this thread.
What was US GDP growth in 1998 compared to today? Maybe that's one reason the impact of the Asian implosion on the US was muted. GDP grew 4.5% in 1998, now we're creeping around 2-2.5%. Any external shock will be felt much more strongly in the US than 15 years ago.
If there is no link between present reality and future events, then +EV cannot imply reliable or predictable profitability (future profits may occur, but purely by chance). It would be irrational to take risk to make +EV bets in this case. For +EV to imply future profits, then +EV must be linked to future events. The flaw in your logic is here: "My pot odds for calling on the river are 7:2, or 3.5 to 1, because I can win a $7,000 pot with a $2,000 call. From an expectation perspective, with a 3.5 to 1 payoff, I am +EV north of 23% (give or take)." You are +EV only if probability tells you something about the future. Whilst I and everyone else believe this to be true, it is clearly logically inconsistent with your claim that +EV is "an observation of the present that makes no meaningful claim on future events." If you say the odds are X%, for example, then you are claiming something about the likelihood of that scenario occurring in future (i.e. when the cards are revealed at the showdown). You are saying the outcome is expected to occur X% of the time. That's clearly a claim about the future. If there is no meaningful claim on future events, then one cannot say that there are any odds at all - rather, the outcome is totally unknowable.
With regards to 98, that is just nitpicking, it certainly fell by more than you expect it to fall this time, whether it technically broke 20% is irrelevant And if you think the EU crisis is priced in, I will just have to disagree strongly. Its a self-fulling prophecy created by market prices and worsened by the fundamentals, it can't be priced in so easily given its reflexive nature without creating the very outcome people are afraid of
Man, you really gotta work on these awful counter-examples In your hypothetical setup, the CEO would be the idiot, not Smithers, because Smithers would in fact be correct to say: "I have no frigging idea, sir, because it's impossible to predict foot traffic. We can know the statistical profitability expectation within a percentage point, but dollar profit will be a function of hands played and bets wagered. We can't know in advance our yearly profits because we don't know if foot traffic and bet volume will be up 20%, down 20%, or something else entirely." This nicely underscores my point: If Smithers were to hazard a guess as to bet volume / foot traffic for the coming year, that would be a prediction. In contrast, knowing the statistical profitability of, say, a million blackjack hands played in standard theoretically correct fashion, at a predetermined wager rate, is simply a math problem. There is a meaningful difference between the two. A refusal to see it is obtuse. And if statistical probability assessments count as prediction, then civil engineers "predict" their bridges will hold up, architects "predict" their skyscrapers will not fall down, and my calculator "predicts" that 8 x 8 is 64.
Oh, lordy. The philosopher David Hume once argued, for the sake of hypothesis, that we can't be certain fire is hot. All we know is that all the fires within the realm of observed human experience are hot. It's possible that somewhere, in present, past or future, a fire burns (or has burned) that is not hot, making the presence of fire and heat a persistent but not universal correlation. Hume wasn't trying to be an ass. He was making a point about causality and uncertainty. From a technically and semantically correct point of view, all scientific laws are actually "predictions" -- claims on the future based on observations of the past, e.g. "Water froze at 32 degrees fahrenheit yesterday and today, so it will also freeze at 32 degrees fahrenheit tomorrow and the day after." If we want to get even more obtuse, we can expand Hume's point to mathematics. Two times two equaled 4 yesterday, but will it do so tomorrow? We can't know for certain -- who knows how the universe might change tonight -- we can only "predict" that yesterday's math will be tomorrow's. And yet, it should be obvious to any common sense individual that using the word "prediction" in such instances is unhelpful. It is clearly useful to distinguish between 1) probability assessments based on mathematics and scientifically confirmed hypotheses, and 2) expectations of a future event not based on hard math and rigorous parameters. Yes, but now you are sitting atop Hume's donkey. If I say that "water freezes at 32 degrees fahrenheit" or "the sun rises in the east," and then I say "these are observed statements of reality, not claims on the future," you would be within technically correct grounds to argue with me. All probablistic, mathematic and scientific observations have some "claim on future events" in the sense that we are forced to assume past, present and future are a logical continuum. But a refusal to distinguish between this kind of situational assessment and straight up prediction -- "casino foot traffic will be up substantially this year; the Patriots will win the Super Bowl" -- is obscurantist. There is gray area here, but that's also part of the original point. The trading mindset that seeks to minimize predictive factors and the trading mindset that embraces predictive factors are poles apart.
If the discussion between the two of you was posted in a separate, dedicated thread then it could reach even more forum users who may find it useful. Here, IMO, it's completely off-topic.
If you click on a user's profile you can find the option to "ignore this user." Then, like magic, the posts don't appear in the thread stream at all. Try it.
I, for one, am enjoying it, in a sort of an idle academic way; it's satisfying some sort of intellectual curiosity, I'm sure.
I enjoy reading your posts about economics and trading (i.e. posts that match the topic of the tread). I can't read them if I put you on ignore. I don't care much for your and Ghost of Cutten's lengthy and completely off-topic discussion on philosophy (i.e. posts that don't belong in this thread). Out of courtesy to the forum readers you should consider using a separate thread. You can start another thread by clicking this link http://www.elitetrader.com/vb/forumdisplay.php?s=&forumid=60 - just select a thread title, message body and then click 'Submit new thread'.