I almost titled this thread "Define Your Terms". With the subtitle "Some Quants are Idiots". Specifically I'm referring to a post in another that references this article:
http://www.priceactionlab.com/Blog/2015/09/trend-following-forecasts/
Notice how Harris and the Qusma blogger he references NEVER define exactly what he means by "forecast". That's the magic trick: pretend like everyone is in agreement with the meaning of a term then make all sorts of presumptuous claims based on that imaginary consensus.
I don't agree with Harris' interpretation of forecast, which for purposes of this thread shall be assumed to be synonymous with predict (verb) or prediction (noun).
Apparently Harris thinks any statement about the future is a forecast. Most people would disagree. If you tell someone you're going to forecast an important event that will happen tomorrow and he goes along, chances are he will not be amused when you reply "the sun will rise tomorrow.". A statement about the future that has no uncertainty attached to it is known as A Sure Thing. The rules of common sense and common decency exclude sure things from the realm of forecasting. At least one party has to doubt the certainty of the event and nobody doubts the certainty of tomorrow's sunrise.
The next distinction is between anticipation and prediction. Human beings live by anticipation, our lives depend on it. It is only by anticipation that we can plan for and many times attain our goals.
Anticipation is a statement about the future which, while perhaps not a sure thing, still has a greater than 50% chance of occurring. They are largely based on past experiences, perhaps not personal experiences but the experiences of others like the anticipater, that If A Then B is a likely event.
I will grant the idea that trend followers anticipate. We anticipate, based on past experiences, that trading with the trend is profitable. I personally believe that trading with the trend is virtually a sure thing, the biggest uncertainty being whether the trend follower is detecting true trend or false trend (chop).
Again,most people would disagree that anticipating is the same as predicting. After all, when the most likely of two or more possibilities actually occurs, who is surprised by that? Besides people like Michael Harris.
So ... common sense tells us that a sure thing is not a prediction. And common sense tells us that most anticipations don't count as predictions either.
A forecast/prediction is a statement about the future that is fraught with uncertainty. All trend followers do is make the best case that they can for an extant trend and then go along for the ride. Go look at the counter-trend guys if you want to find predictors. Those guys truly need psychic powers.
http://www.priceactionlab.com/Blog/2015/09/trend-following-forecasts/
Notice how Harris and the Qusma blogger he references NEVER define exactly what he means by "forecast". That's the magic trick: pretend like everyone is in agreement with the meaning of a term then make all sorts of presumptuous claims based on that imaginary consensus.
I don't agree with Harris' interpretation of forecast, which for purposes of this thread shall be assumed to be synonymous with predict (verb) or prediction (noun).
Apparently Harris thinks any statement about the future is a forecast. Most people would disagree. If you tell someone you're going to forecast an important event that will happen tomorrow and he goes along, chances are he will not be amused when you reply "the sun will rise tomorrow.". A statement about the future that has no uncertainty attached to it is known as A Sure Thing. The rules of common sense and common decency exclude sure things from the realm of forecasting. At least one party has to doubt the certainty of the event and nobody doubts the certainty of tomorrow's sunrise.
The next distinction is between anticipation and prediction. Human beings live by anticipation, our lives depend on it. It is only by anticipation that we can plan for and many times attain our goals.
Anticipation is a statement about the future which, while perhaps not a sure thing, still has a greater than 50% chance of occurring. They are largely based on past experiences, perhaps not personal experiences but the experiences of others like the anticipater, that If A Then B is a likely event.
I will grant the idea that trend followers anticipate. We anticipate, based on past experiences, that trading with the trend is profitable. I personally believe that trading with the trend is virtually a sure thing, the biggest uncertainty being whether the trend follower is detecting true trend or false trend (chop).
Again,most people would disagree that anticipating is the same as predicting. After all, when the most likely of two or more possibilities actually occurs, who is surprised by that? Besides people like Michael Harris.
So ... common sense tells us that a sure thing is not a prediction. And common sense tells us that most anticipations don't count as predictions either.
A forecast/prediction is a statement about the future that is fraught with uncertainty. All trend followers do is make the best case that they can for an extant trend and then go along for the ride. Go look at the counter-trend guys if you want to find predictors. Those guys truly need psychic powers.
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