A group of econophysicists recently made a bold prediction, the Shanghai stock exchange would crash between July 10 and August 10, 2009. A silly prediction? Maybe not.
Ironman at Political Calculations offers some further thoughts. Graph from arXivblog.
Oh fuck off, it’s not close to a crash.
Brits are so subtle.
Look at the paper. The chart is almost identical. “Crash” or not is semantics.
‘The Bank’ (2001) with David Wenham is pretty good.
Prediction or self-fulfilling prophesy??
If he wants this to be treated as scientific theory, then he needs to explain in detail how he made his calculations.
@Michael F. Martin: Here’s the paper where Sornette et al‘s math appears. Questions about which should be referred to the authors….
No, no, no. You can’t predict the future from the past. What other ‘predictions’ have they made that were incorrect? What is there next prediction – maybe on the suckers rally.
Their primary prediction was wrong. Now Alex is trying to argue a way that an aspect of what they said may be right? Ridiculous. Any highly volatile market will “crash” sometime.
So, Sornette and crew have finally scored one. I will give him credit that he is willing to make these sorts of public
predictions. In the past they have failed spectacularly, although his models can fit past data pretty well. So, here he
has hit the jackpot.
I was at a conference on econophysics and sociophysics in Zurich last August with Sornette there. Pointed out how he had
made bad forecasts in the past. He was not happy, but agreed that he had been “naive.” It looks like he is using the
same method he has used before, with this LPL method having some pretty shakey underpinnings, but in this case with a much
less embarrassing outcome than usual.
BTW, his approach is quite different from that of most econophysicists, who tend to come out of statistical mechanics.
He has come out of geophysics and predicting earthquakes. Funny this, given that Arnold Kling just posted on econolog about
earthquake models and macro models, drawing on some remarks by Mark Thoma.
I’m a big MR fan, but just to be fair: this blog (along with myself and myriad others, I’m sure) called that prediction “silly” when it came out.
http://www.marginalrevolution.com/marginalrevolution/2009/07/assorted-links-9.html
http://www.technologyreview.com/blog/arxiv/23839/
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