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October 27, 2006


Forecasting Changes In the State of Long-Term Expectation

Bill Miller’s Market Comments: Third Quarter 2006

In markets, competitive advantages are three: informational, analytical, or behavioral. Informational advantage is when you know something material that someone else doesn’t. It is the easiest to exploit and the hardest to find. Analytical advantages come from taking publicly available information and processing or weighting it differently from the others.

Behavioral advantages are the most interesting because they are the most durable. The field of behavioral finance is still in its infancy yet has already yielded results that can be incorporated profitably into a sound investment process. The best part is that such results are likely to be systematically exploitable and not able to be arbitraged away as they become more widely known. That is because they represent broad findings about how large groups of people are likely to behave under well-defined circumstances. Until large numbers of people are able to alter their psychology (don’t hold your breath), there is money to be made from prospect theory, support theory, cognitive psychology, and neuroscience.

Or to put it more simply, you have to learn how to buy ‘em when they ain’t.

- via Ticker Sense -

8 Responses to “Forecasting Changes In the State of Long-Term Expectation”

  1. Declan Fallon said:

    I don’t know if I am the only one experiencing this problem. Using the old school version of Explorer (6.0), I am getting this message:

    WordPress database error: [Can’t open file: ‘wp_bas_log.MYI’ (errno: 145)]
    INSERT INTO wp_bas_log (visit, stamp, outbound, page) VALUES (616678, ‘2006-10-27 21:03:24′, 0, 1);

    The left hand page has a dary grey block which obscures half the text of your posts. This didn’t happen before, so it maybe a recent change (over the last week??) which has caused this?

    Best wishes,
    Declan

  2. Tom said:

    Declan, I use FF and I get the problem too. Must be on the Chairman’s end of things.

  3. C. Maoxian said:

    Declan & Tom: Thanks, I’ve noticed this too and sometimes it’s there and sometimes it isn’t … no idea how to fix it of course. ;-)

  4. Zoomie said:

    WordPress database error: [Can’t open file: ‘wp_bas_log.MYI’ (errno: 145)]
    INSERT INTO wp_bas_log (visit, stamp, outbound, page) VALUES (616678, ‘2006-10-27 21:03:24′, 0, 1);

  5. Zoomie said:

    Sorry, I couldn’t resist ;)

  6. C. Maoxian said:

    Zoomie: Thanks, it should be fixed now. Let me know if it isn’t.

  7. Declan Fallon said:

    Chairman,

    Looks to be working fine now (if you changed anything?).

    Best wishes,
    Declan

  8. C. Maoxian said:

    Declan: Thanks, apparently something called a MySQL table (?) got corrupted somehow, but it’s fixed now.

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