(no subject)
Oct. 7th, 2008 10:23 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
catsidheI've been meaning to post this thought for a while, but kept getting sidetracked. Now that people who get paid to know this sort of thing are coming to similar conclusions, I may as well get it out.
The media has been laying on the bullshit well thick with their commentary on the state of the stock markets, not just now, but for years — decades, even.
“Markets today were bouyed with the news that [blah blah blah], and finished up 2 points.”
“Markets today were spooked when [gabba-gabba-hey], and were down 17 points, before rallying”
As if such a complicated, intricate, non-linear system could be explained so trivially. No, the markets went up and down because that's what markets do: it's what they're for. That at the end of nondeterministically oscillating it ended slightly higher or slightly lower than it started is utterly irrelevant as typically presented. What you are looking for is trends on the prices over time, taking into account maxima and minima, rolling averages, polynomial trend lines, many many many other statistical characteristics that “twelve points up at close” simply doesn't cover.
But yet, you can sometimes see enough. And since banks started floating belly up at the top of the tank, there has been a pattern in the stock reports.
“Markets surged today, based on something, buggered if we know what, maybe the market is optimistic about something, but surged to a new record of umpty million points, a 17% increase on yesterday's close” ... then, the next day ...
“Markets fell drastically today, we think it has something to do with people in Washington arguing over whether or not to spend seven tenths of a TRILLION FUCKING DOLLARS, or maybe the market just needs a hug, and it closed at eleventy thousand points down...”
After a (relatively) long period of compound growth, the error bars, the difference between maxima and minima as a proportion of the absolute size of the price, started increasing. A lot. People didn't seem to notice, even as the market volatility began to go critical. And then, the final straw, when the accountants looked at the books and realised that they'd been burning money for decades, at that Holy Fuck moment The Market realised that it wasn't in control of itself any more. The swings got extreme, and worse.
Now, anyone who has studied feedback systems, deterministic or not, will recognise this behaviour. It is the same as when the magnetic poles shift around wildly before reversing. It is the same as when your heart stops going lub-dub, and starts tapping out something in syncopated 17/5 ... until it stops.
This, ladies and gentlemen, is a phase state change in a dynamic system, and it is far, far too late to do anything except try to influence what the result will be when it settles down again. Only one thing is certain about the outcome: it is guaranteed not to be the same as what went before. The markets are going into fibrillation. Whether $US700e9 is enough CPR, enough of a shock to restart something like a functioning system, is an interesting question. I would have preferred to see the shock of some of the people (natural and legal), getting fired, sued, shut down. If we're stuck with an act of legal fiat saying that a corporation is a ‘person’, then why shouldn't they bear some of the consequence of their actions for a change? But no-one's listening to me. (Except you, dear reader, and odds are that you can't do anything about it either.)
But anyway. Enjoy the ride, folks. Hope that someone in a position to do so knows what they're doing (or makes the right guesses), because it's far too late to stop, and far too big for any of us to influence.
I would be curious if Lazyweb could source for me data on, say, NASDAQ prices for the last decade or so. Complete data would be nice, but daily closing, max and min would do. I'd like to see if I can actually back any of the above up with actual numbers.
Shorter Catsidhe: “Where are we going, and why are we in this handbasket?”
The media has been laying on the bullshit well thick with their commentary on the state of the stock markets, not just now, but for years — decades, even.
“Markets today were bouyed with the news that [blah blah blah], and finished up 2 points.”
“Markets today were spooked when [gabba-gabba-hey], and were down 17 points, before rallying”
As if such a complicated, intricate, non-linear system could be explained so trivially. No, the markets went up and down because that's what markets do: it's what they're for. That at the end of nondeterministically oscillating it ended slightly higher or slightly lower than it started is utterly irrelevant as typically presented. What you are looking for is trends on the prices over time, taking into account maxima and minima, rolling averages, polynomial trend lines, many many many other statistical characteristics that “twelve points up at close” simply doesn't cover.
But yet, you can sometimes see enough. And since banks started floating belly up at the top of the tank, there has been a pattern in the stock reports.
“Markets surged today, based on something, buggered if we know what, maybe the market is optimistic about something, but surged to a new record of umpty million points, a 17% increase on yesterday's close” ... then, the next day ...
“Markets fell drastically today, we think it has something to do with people in Washington arguing over whether or not to spend seven tenths of a TRILLION FUCKING DOLLARS, or maybe the market just needs a hug, and it closed at eleventy thousand points down...”
After a (relatively) long period of compound growth, the error bars, the difference between maxima and minima as a proportion of the absolute size of the price, started increasing. A lot. People didn't seem to notice, even as the market volatility began to go critical. And then, the final straw, when the accountants looked at the books and realised that they'd been burning money for decades, at that Holy Fuck moment The Market realised that it wasn't in control of itself any more. The swings got extreme, and worse.
Now, anyone who has studied feedback systems, deterministic or not, will recognise this behaviour. It is the same as when the magnetic poles shift around wildly before reversing. It is the same as when your heart stops going lub-dub, and starts tapping out something in syncopated 17/5 ... until it stops.
This, ladies and gentlemen, is a phase state change in a dynamic system, and it is far, far too late to do anything except try to influence what the result will be when it settles down again. Only one thing is certain about the outcome: it is guaranteed not to be the same as what went before. The markets are going into fibrillation. Whether $US700e9 is enough CPR, enough of a shock to restart something like a functioning system, is an interesting question. I would have preferred to see the shock of some of the people (natural and legal), getting fired, sued, shut down. If we're stuck with an act of legal fiat saying that a corporation is a ‘person’, then why shouldn't they bear some of the consequence of their actions for a change? But no-one's listening to me. (Except you, dear reader, and odds are that you can't do anything about it either.)
But anyway. Enjoy the ride, folks. Hope that someone in a position to do so knows what they're doing (or makes the right guesses), because it's far too late to stop, and far too big for any of us to influence.
I would be curious if Lazyweb could source for me data on, say, NASDAQ prices for the last decade or so. Complete data would be nice, but daily closing, max and min would do. I'd like to see if I can actually back any of the above up with actual numbers.
Shorter Catsidhe: “Where are we going, and why are we in this handbasket?”
![[identity profile]](https://www.dreamwidth.org/img/silk/identity/openid.png){kind=small}
(no subject)
Date: 2008-10-07 04:07 am (UTC)Your phase state-change analogy is a good one, but it doesn't go far enough. You should consider the financial system as only one of about half a dozen systems being pressured into such a change by massive global population growth and energy consumption. Other systems also on the verge of failing: the ocean biosystems; all complex land-based ecosystems; the world energy economy; the world agricultural system, and the world's heat and CO2 handling systems.
Don't take my word for it. Read the journals. Every one of those systems is in trouble. In other words, your phase state-change is not limited to the economic and financial structures of the world, but in fact every aspect of life and technological human civilisation on this planet.
Now you know why I live in Tasmania: I really did do something about this already, to the best of my capacity.
(no subject)
Date: 2008-10-07 07:08 am (UTC)(no subject)
Date: 2008-10-07 10:40 am (UTC)Something like this you mean?
http://finance.yahoo.com/q/bc?s=^AORD&t=my&l=on&z=m&q=l&c=
(no subject)
Date: 2008-10-07 11:15 am (UTC)It's a b bit much for my poor little laptop to grind through all that, but I was rather startled to see the daily delta/close graph did not appreciably increase in amplitude as I was expecting. I'll need to take a closer look at the last few months, I expect.
(no subject)
Date: 2008-10-08 01:32 am (UTC)