Volatitily as social flaring

Doug Henwood dhenwood at panix.com
Fri Feb 16 14:19:22 PST 2001


J. Barkley Rosser, Jr. wrote:


> Obviously you are right and I promise to clean
>up my act and reform my wicked ways. Clearly
>math is an illusion. Examining the details of how
>a set of equations depicting investor behavior
>generate certain outcomes over time via computer
>simulation is as empty and meaningless as spending
>a lot of time poring over tables of numbers.
> Henceforth, let us both agree to only write our
>ideas about economics in poetry, preferably Romantic.

Might you descend from this summit of condescension and explain just what this accomplishes? It's pretty well established that markets overreact - which, as you explained this morning, can be described as "leptokurtosis," which sounds a lot more rigorous than saying that markets overshoot reasonable valuation targets on the way up and on the way down. What would a computer simulation tell you? I can understand if you're trying to make money or sell market projections, but what, scientifically speaking, would be gained by this exercise? If I were given to reckless psychoanlysis rather than asking questions, I might suggest that your "empty and meaningless" comment actually expresses your own anxiety that the exercise is empty and meaningless - safely buried in a defensive irony - but I'm not given to such, and I'm really asking questions.

Doug



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