NialScorva

Fibonacci shows up fairly frequently. Golden ratios I'm not so sure about.

Undercurrent

The golden ratio is used in some black-box bracketing line minimization optimizers. Its basic usefulness is that when you do the next iteration to refine the approximate position of the root, you can recycle some of the function evaluations from the previous iteration, so you don't have to do as many in total.

Baloo

It strikes me as sounding more like strange attractors in chaotic systems - the same kind of thing that makes El Nino farily predictable years in advance, but an afternoon thundershower utterly unpredictable even the morning before.

pz

If one is there, the other is too.

Celsus

Well here's what Ruy told me here with respect to his Kondratieff waves:

• It was mentioned earlier that neither Kondratieff nor Joseph Schumpeter could offer definite causative principles for the trend observed. Neither would I offer one. It is like hurricanes or typhoons hundreds of years ago. People can feel one is coming and are familiar with its effects but they could not explain the drastic change in the weather. The body of mainstream economists, like natural scientists, have strict norms for accepting entries into the general body of knowledge.

I also attempted a follow-up thread here. In both cases, giving up early and saving several hours of my life would have been a better option. Good luck to the rest of you.

Joel

liquid

I've actually read a little about Kondratieff waves. I've got two opinions on them.

1) Firstly, they seem to state the obvious, at the trivial level. I've seen people (small time investors with a lack of mathematical skills generally) try to convince me that they are the greatest technique since sliced bread by pointing out the up/down/up/down/up cycles as if they are evidence.

Of course, what they don't seem to realise is that if you classify stock movements into up phases and down phases, that's the only pattern you are ever going to get! If you are going up, the only possible change is a subsequent down...

2) As for the 'real' science behind the idea, such as finding patterns on a particular wave (for instance, IIRC the third wave up is typically the largest).. well, the hypothesizing is valid, but I don't see any grand truths in it yet.

I actually have some sympathy with the chartist approach. It should work better than it does! But there's never been an investing system that performed consistently above tracker funds. I suspect that's strong evidence for the market factoring in any new tools or information we have, or for the plain irrationality of people!

Ruy Lopez

Wounded King:

I haven't seen PI but will look for it in the DVD shop. Thanks

From PZ;
This sounds like numerology. What is the underlying causal relationship that would predispose prices to follow this pattern?

Frankly I do not know the answer; nor do I know anyone who does. We (traders who notice the waves), prefer that the public does not know why. If many people know the causality of the waves, they would be anticipated or discounted and would metamorphose into something else. The phenomenon does not belong to immutable natural law or some permanent physical reality.

Undercurrent and Baloo:

Thanks for your reply and I understand the post except "black box bracketing line minimization optimizers". Can you spare a brief paragraph. You might have something here and also which ratio--.618?

Yes Baloo, looks like a certain order amid seeming chaos. Had some brushes with El Nino; it's a five-year cycle.

Post By Celsus:

This is complex and would be off-topic. But if anyone is interested, read through the link Celsus provided;

http://www.iidb.org/vbb/showthread.p...threadid=48634

And if anyone is really interested, I suggested two books by Nicholas Darvas and the other, by J.M Hurst to get one started. A word from one who passed this road before. This is a NO PAIN NO GAIN affair.

From Liquid:

I've seen people (small time investors with a lack of mathematical skills generally) try to convince me that they are the greatest technique since sliced bread by pointing out the up/down/up/down/up cycles as if they are evidence.

You're right. There are many people who pretend or think they understand chart reading. Some do it deliberately, like charlatans, to make you part with your money.

You seem to know a lot about technical analysis or charting. Could you try to explain how the following was done?

I posted this on Elwoodblues' thread last March 24, 2003;

All that is happening is a three-week cycle, wave or motion correcting a previous 8-day run-up. Three weeks equals 15 trading days. Today is the 9th day; expect the market to drift downwards in the next 6 days. To see the major or primary trend, a 10-20 year chart is needed.



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March 24, 2003 07:54 PM

What actually happened after March 24 can be seen in the following chart.

http://bigcharts.marketwatch.com/int...ymbol&sid=1643

To enlarge the daily bars(chart), use the mechanism on the left. Set "time" to 6 months and "frequency" to daily; then click "draw chart".

March 23 and 24 are the highest two days on March. After locating them, count the number of trading days moving downwards. There are 6 days; right? Now read again the underlined words in my March 24 post "drift downward" and "next 6 days".

It is easy to guess that after March 23 and 24, the Dow would decline; half the population can do that. But how do you account for the exact phrase "drift downwards" (not plunge, zig-zag or plateau) and the exact 6 days after which the index rose again?

Actually I made another prediction last July 2002 consisting of four distinct events, two of which happened exactly as predicted. The remaining two are for June 2003 and October 2006. It's in the IIDB archives, I don't feel like searching now.

My point is there are a few people, very few, who learned how to read charts. The brilliant question is--WHY ARE THEY NOT MULTI-MILLIONAIRES?

Edit: By the way, this is Elwoodblues thread
http://www.iidb.org/vbb/showthread.p...threadid=48581

Hawkingfan

If you want to be an artist, it can come in handy. Check out Piet Mondrian and Mark Rothko paintings to start (it's a way of getting that "natural", balanced look without using symmetry in abstract art). A lot of composers use them in structuring the form of their peices as well.
But as far as the sciences, I don't think there is a use at all. The life sciences realize the golden ratios and Fibonacci series occur regularly in nature, but I don't think they go beyond recognizing that fact. I used to be obsessed with it, but I think alot of that obsession is selective thinking (the series occurs alot in nature, *but* it also *doesn't* occur).

pz

Not quite. Nobody regards them as 'magic' numbers, and nobody is too mystified about why they show up all the time, because we understand the mechanism: it's a standard growth series. The numbers pop up all the time in biology because biology is all about growth.

Every once in a while, you do get some numerological dingbat who claims it is god peeping into the physical world and imposing order on it, but we just slap 'em around a bit and send them off to babble in a church or something.

liquid

Ruy, I'm not a charting expert - but I do come across these things as part of my current work, and I'm sure I'm numerate enough to be able to do it all if I did the hard work necesary.

Anyway, I'm not quite sure what you are asking in regard to that post... I can see the claim, and the graph. Not too happy about the use of 'drift downwards' - should have used a predicted gradient or something. So what's being claimed on the back of that? Or are you merely asking how the maths works? I apologuse if I'm missing the obvious!

Afraid I might not be able to reply to you later though. I was due to leave on a flight earlier but it was cancelled (hence passing time on the board!)