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a story about FUNDAMENTAL ANALYSIS
back in 50s - 60s, fundamental is the way to analysis a company ...
but how? everyone has their own interpretation! just like TA we
have right now ...
Then when James O'Shaughnessy came out with his research result
proving all the so call investment professionals are morons ... and
all they were trying to find is a way simpler ratio instead of an art
form, and the answer to fundamental filtering is indeed mechanical ...
now, everybody use his stuff ... secretly and openly.
similar situation for technical based trading ...
who will be willing to share their ground breaking research?
not me for sure! maybe 50 years later :)
-Lawrence Chan
----- Original Message -----
From: Gary Fritz <fritz@xxxxxxxx>
To: <omega-list@xxxxxxxxxx>
Sent: Wednesday, February 16, 2000 5:39 PM
Subject: Re: Which holds best promise?
> We're all splitting hairs here, but ...
>
> > well, gary, you've come to my way of thinking in that you can't
> > program 100% of a discretionary trader's approach.
>
> Only (in theory) because you can't KNOW 100% of a typical
> discretionary trader's approach. AI and Expert System research back
> in the 80's and early 90's demonstrated it's damn near impossible to
> crawl inside an expert's head and dig out ALL the rules he uses.
>
> In theory, *IF* you could get ALL the rules that a discretionary
> trader uses, you could program it. It might be EXTREMELY difficult
> to do so given today's technology, especially if the trader relies on
> a lot of visual pattern matching, gestalt "feel" of the markets, etc
> etc. But it's possible.
>
> IMHO, the problem is not that the brain is capable of doing things
> that a computer fundamentally can't do. The problem is that the
> brain does those things in mysterious ways, and we don't fully
> understand how it does them yet, and we haven't found a good way to
> emulate it. We don't *have* to exactly duplicate the brain's
> functionality, any more than we have to build a 50-foot bird's wing
> to make a 747. We can emulate it with another approach and then
> apply brute force (jet engines, CPU horsepower) to make up for the
> cruder implementation, and quite possibly do BETTER than the original
> -- not too many birds can fly 600mph. But we don't know how to do
> that (yet) for a lot of higher brain functions. When we figure it
> out, I predict most (not all) discretionary traders will be replaced
> by computers just like the accountant with a pencil was replaced by
> spreadsheets. But that's a long way off yet.
>
> In practical applications today, it's true that your brain can do
> things that no computer can do. Nobody knows what you're doing, so
> they can't program it. That's why very few systems work the way
> discretionary traders do. The system designers use a totally
> different approach that they CAN program.
>
> Gary
>
>
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