Hello everybody,
In a brilliant book by Tetlock and Gardner called "Superforecasting", the authors juxtapose what they call the "inside" and "outside" views of a problem. In fact, the terms were first introduced by psychologist Daniel Kahneman (2002 Nobel in Economics). With the inside view, people pay attention to the details of a specific phenomenon or matter at hand; they find it more fascinating and interesting, there is always a story or many interesting stories to be told. With the outside view, it is much more boring and abstract; it requires comparing things, evaluating results etc. etc.
But the authors claim that it is the outside view that has to come first. They give an example: to the question if a family has a pet, most people would want to know what kind of family it is, if they have kids, what their neighborhood is like and so on; that is, they would take an inside view of it. But a "superforecaster" would first of all take the outside view: he would like to know how many households have pets in that country/city at all. That would be his first estimate, from which he would proceed further.
Now speaking about the coronavirus which is all the rage now: the outside view tells us that similar outbreaks happen every so many years; that common flu epidemics happen every year with thousands of deaths and nobody demand to shut borders (for example, in the US alone, according to the Center of Disease Control and Prevention (CDC), 12 to 61 thousand people have died annually since 2010); that the impact is limited; that, within some reasonable time, a vaccine and effective cure will be found etc. etc. In short, there is no reason for panic.
Nonetheless, panic we do observe. In the markets and in everyday life. Moreover, the panic from the virus, exaggerated as it is, is now being amplified by another: that of a socialist (perceived by many as a "communist") Bernie Sanders coming to power in November. Which is of course another exaggeration and "inside view" on the American politics.
Of course, in terms of trading, these considerations are not very helpful, since markets are often driven by the "madness of crowds". ELP Program, on the other hand, is objective and impartial. Therefore, it may sometimes lag or overtake the market. But sooner or later, the market participants always come to their senses and fundamental patterns prevail again.
Good luck,
ELP team
In a brilliant book by Tetlock and Gardner called "Superforecasting", the authors juxtapose what they call the "inside" and "outside" views of a problem. In fact, the terms were first introduced by psychologist Daniel Kahneman (2002 Nobel in Economics). With the inside view, people pay attention to the details of a specific phenomenon or matter at hand; they find it more fascinating and interesting, there is always a story or many interesting stories to be told. With the outside view, it is much more boring and abstract; it requires comparing things, evaluating results etc. etc.
But the authors claim that it is the outside view that has to come first. They give an example: to the question if a family has a pet, most people would want to know what kind of family it is, if they have kids, what their neighborhood is like and so on; that is, they would take an inside view of it. But a "superforecaster" would first of all take the outside view: he would like to know how many households have pets in that country/city at all. That would be his first estimate, from which he would proceed further.
Now speaking about the coronavirus which is all the rage now: the outside view tells us that similar outbreaks happen every so many years; that common flu epidemics happen every year with thousands of deaths and nobody demand to shut borders (for example, in the US alone, according to the Center of Disease Control and Prevention (CDC), 12 to 61 thousand people have died annually since 2010); that the impact is limited; that, within some reasonable time, a vaccine and effective cure will be found etc. etc. In short, there is no reason for panic.
Nonetheless, panic we do observe. In the markets and in everyday life. Moreover, the panic from the virus, exaggerated as it is, is now being amplified by another: that of a socialist (perceived by many as a "communist") Bernie Sanders coming to power in November. Which is of course another exaggeration and "inside view" on the American politics.
Of course, in terms of trading, these considerations are not very helpful, since markets are often driven by the "madness of crowds". ELP Program, on the other hand, is objective and impartial. Therefore, it may sometimes lag or overtake the market. But sooner or later, the market participants always come to their senses and fundamental patterns prevail again.
Good luck,
ELP team
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