WinROTT and the economy...

by Codewiz51 November 20, 2008 21:18

First, the good news: I've made a new release of WinROTT. It was a difficult release, involving multiple files. I ported the actor and action table functions to cpp.

Second, the bad news: I've been morbidly watching the economic reports and the stock market. I'm wondering where all of this will end up. I am amazed at the number of so called investors that think they can all wait for the stock markets to react rationally and start going back up. I don't think it will work this way.

If 90% of investors are waiting gleefully for capitulation so that the market will go back up, then we have not reached capitulation. In fact we are not close to true capitulation in the real sense of the word. The market will not allow 90% of investors to be winners and 10% to be losers. Investors watching patiently don’t realize they are simply marking time until they too, reach a state of panic. In an expanding market, it's not a zero sum game; in a contracting market, it rapidly approaches a zero sum game. (I wish I had paid more attention to my one and only course in game theory so I could explain this a little better.)

If every investor is using the same playbook, executing the same strategy and expecting the textbook outcome, then the outcome will be different. I am not too sure of the math, but I am pretty sure that the greater the population adhering to actions that should cause a particular outcome, the less likely that outcome will be obtained. In a zero sum game, you are not likely to have an outcome where 90% of the players "win".

In this market, the only thing we know is that it is not like anything any of us have seen in our lives.

 

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