"Have you ever wondered how economist “consensus” predictions are derived or if they are even worth paying attention to? NPR had a segment today on this topic (click here).
There will always be the human tendency to think that a group of experts have a better chance of being right than the masses. However, I’m not sure that this is right. In fact, this is the very topic addressed in the book The Wisdom of Crowds, by James Surowiecki. The central theme of the book is that, in many cases, groups are remarkably intelligent and are often smarter than the smartest people in them. In the case of the financial markets, millions of self-interested participants buy and sell securities, resulting in price trends. Each investor then has the choice of adhering to the “wisdom of the crowds” and following those price trends in a systematic fashion, or disregarding the price trends and taking expert “consensus” opinion..."
at http://systematicrelativestrength.com/2011/08/04/who-is-the-consensus/
There will always be the human tendency to think that a group of experts have a better chance of being right than the masses. However, I’m not sure that this is right. In fact, this is the very topic addressed in the book The Wisdom of Crowds, by James Surowiecki. The central theme of the book is that, in many cases, groups are remarkably intelligent and are often smarter than the smartest people in them. In the case of the financial markets, millions of self-interested participants buy and sell securities, resulting in price trends. Each investor then has the choice of adhering to the “wisdom of the crowds” and following those price trends in a systematic fashion, or disregarding the price trends and taking expert “consensus” opinion..."
at http://systematicrelativestrength.com/2011/08/04/who-is-the-consensus/
No comments:
Post a Comment