Around here we’d call that a ‘skill set’.

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I have a case of Blenheim ginger ale in my garage refrigerator.

BRC
http://www.themusingsofthebigredcar.com

Easily enough the prices are not exactly Brownian motion, but overall can regard it as surprisingly good. It’s not always wildly wrong.

Yes, Brownian motion is a tricky construction of pure math that really can’t exist in reality; it’s just that Brownian motion can be a good enough model for some things in reality. E.g., as botanist R. Brown once did, put a really tiny piece of pith on the surface of some water and watch the pith mover around on the surface of the water as it gets hit by the thermal motion of water molecules, and then can start to believe in Brownian motion.

Well, on trends, the pure math version of Brownian motion doesn’t have any trends. It never has a trend, not even for a nanosecond. It never has a well defined tangent line. In the sense of calculus, it never has a derivative — e.g., for time t and Brownian motion B(t), the calculus

limit (B(t + h) – B(t))/h
h –> 0

never exists. That is, keep making h smaller, and that ratio just keeps jumping around and never settles down and approaches something — never. So, no derivative, no tangent line, no trend.

So, whenever anyone is counting on a trend, they are also saying that they believe that what they are looking at is not even approximately Brownian motion, and for the stock market, that’s risky.

Of course, if the CFO of a company has a lot of options for the stock of that company and the stock price seems to start to go down, then the CFO might want the company to do a stock buyback. Ah, but no one would ever actually do such a thing! And if they did, then they would never let the secret leak out where a hedge fund guy might hear it — of course not!

Of course, none of this stuff about Brownian motion influences the financial pundits and newsies who eagerly talk about trends, draw graphs and overlay big red arrows, mention chart theory with patterns, etc. on prices the Black-Scholes people are modeling as Brownian motion!

http://themusingsofthebigredcar.com/when-the-trend-is-not-your-friend-twitter-sriracha/

BRC
http://www.themusingsofthebigredcar.com