Chris Dillow objects to some blanket claims of Alex Douglas. I would say that it strengthens the point that Alex was making, that successful predictions based on hypotheses derived from general theory are unicorns. Dillow cites empirical studies.
Nice to see that Alex is being read and Dillow's post is a shoutout of sorts.
Stumbling and Mumbling
In defence of (some) economics
Chris Dillow | Investors Chronicle
Stumbling and Mumbling
In defence of (some) economics
Chris Dillow | Investors Chronicle
2 comments:
Once again the problem with 'empirical studies' is that they are studying the machine created by neoliberalism.
If you put a man in a straitjacket unsurprisingly he will move like a man in a straitjacket.
What it doesn't tell you and can't tell you is what the man outside the straitjacket moves like.
On the point of momentum investing. We created a lot of mechanical momentum investing algorithms in the early 2000s to take advantage of the dot-com boom.
What you find is that whatever algorithm you come up with fills in over time. Because it is an example of curve fitting.
Since Chris has identified apparently a risk free way of making money, you do wonder why he hasn't retired on the proceeds yet?
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