Category Archives: Market Statistics

Correlation Between Stocks and Yields Does Not Point to a Correction

A major concern amongst investors at this point is whether the FED will change its low interest rate policy and some analysts attribute recent fluctuations in stock prices to it but the correlation chart below points to no major correction in stocks … Continue reading

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Statistics and Lessons From the Last Three S&P 500 Uptrends

The coin is biased towards heads. The statistics indicate that the last three uptrends in S&P 500 were the result of a small structural bias in the order of +6%. This bias may continue in the absence of adverse developments. Share

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The Gloomy Fate of the Bayesian Passive Investor

One fundamental assumption of Bayesian statistics is that the future will behave as the past. Bayesian passive investors, defined in this blog as investors who, given new evidence, believe that the market will continue to go up for a long time, … Continue reading

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The Forexization of the Stock Market

Due to central bank intervention via quantitative easing and the rise of dark pools, the stock market is under “forexization”. This will be good for a few major players but, given the experience from the forex market, it is a negative … Continue reading

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The 1990s, the 2000s and the 2010s

The charts below show how market dynamics have changed from the 1990s, to the 2000s and into the 2010s, with V-shaped recoveries becoming dominant and taking the place of consolidation periods. Share

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Inference to the Best Explanation

In the markets, deductive inferences do not usually provide any answers because the appropriate premises to use are unknown. Inductive inferences are plagued by data-mining bias and noise. Inferences to the best explanation are usually weak but may offer higher chances of … Continue reading

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The Technical Signals Than Get You Out and Then Back In

A must read yesterday at The Reformed Broker blog about pundits, market top calls and the fact that “The guys who get you out will never get you back in“. On the other hand, resorting to buy and hold does … Continue reading

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