Quote from Nine_Ender:
There is nothing misinformed about my comments; if someone wishes to present a theory on here they better be able to explain it in reference to an example. This is the essence of science versus religon or superstition.
BVF is actually quite a normal move for a stock where expected value has been upgraded for a fundamental reason. This is my point that differentiates markets from coin flipping. I've noticed this on many threads on ET lately, people are forgetting what stocks really are ( ownership in the underlying company ), getting lost in technical theories and not seeing the bigger picture.
This coin flipping thread is one of the worst threads in terms of getting lost in theory and not knowing how to practically apply this "knowledge" to actual trading or investing. I'm reeling in these people with an open mind that they can explain how they would apply their theories to trading in BVF.
This response is indicative of your inherent bias in the way you view markets, trading, investing etc.
The theory presented here is very sound. If you had read the reference materials/threads, you'd be rethinking your own assumptions.
We are not talking about personal biases here nor are we talking about some fundamental reason for price movements. We are talking about random behavior.
The context of this thread is the mathemetical representation of a random stochiastic process, and, it's potential insights in the realm of trading. This is not some grand unified theory of what "stocks really are", it is a glimpse into what statistics can offer.
In fact, you've missed the point so badly that perhaps you're not alone, so I'll make it very clear; when you don't understand randomness, you will never understand what is not random. It is the correlation versus causation fallacy in a nutshell.
Case in point, how do you know the fundamental driver in the BVF example is statistically significant? Which elements of that price move repeat and what are the causes? How do you segregate potential causes into random versus non-random?
Again, claiming "just look at the chart" is not evidence that you're looking at a non-random process (although in BVF's case this might be true). I can easily run a random time series process a few million times and from that set of runs you will see a couple of trends (i.e. random artificial price movements) that look just like BVF's "run"....
