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ologhai

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About ologhai

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  1. ologhai

    Simulating Stock Price Movements

    Thanks. Forum-wise, I've mostly been hanging around HPC. In the main, I remember finding myself quite out of my depth with many of the topics discussed on here. HPC is much lighter weight, and, for the most part, more within my limited abilities. I look forward to any thoughts and insights you (or anyone else) can offer in due course. Thanks again!
  2. It's been many a moon since I posted here, but I hope you won't mind if I ask for your views. It seemed like the kind of thing that might be of interest to you. I've recently put together a few somewhat disparate ideas into something that, for the want of a better term, I'll call a stock market investment strategy. Being reasonably able to write computer software, I've set about trying to simulate how well my idea for a strategy might perform. To do this, I needed to be able to simulate the price movements of individual stocks. I have worked out a method to do this, and have been using it in the simulations I've been tinkering with. However, I've been wondering if any of you can see any obvious problems, or perhaps suggest better approaches to simulating stock price movements. Here's the gist of how I simulate individual stocks (I'm not saying it mimics what stocks do precisely, but I'm hoping it represents how stocks behave at least somewhat): First of all, I set some upper and lower boundary on how much the price of an individual stock can change in a month. The strategy I'm playing with actually seems to benefit from volatility, so I've been quite restrictive here and set it to +/- 5%. In principle, the number's not important, though--it just puts a limit on how much a stock price can move by in a month. Then, for each stock purchased, I initialise it with a random fiddle factor I'm calling 'quality'. This is a number between -100 and 100 and represents a percentage; specifically what proportion of the maximum allowed stock price change will an individual stock move by in the current month. If we stick with the +/- 5% from a moment ago, that means a stock with a quality of -100 will lose 5% in a given month, a stock with quality of -50 would lose 2.5%, a stock with +50 would gain 2.5% and so on. As each month goes by, any stocks that remain in the portfolio have their quality adjusted by +/- 20 (but still within the limits of +/- 100), and around we go again. For reasons of prudence and pessimism (basically to assume 'bad luck' when it comes to stock picking), initial stock qualities, although random, are skewed so that the average is -20 (rather than the 0 you might normally expect). In addition, for the same reason, instead of making the quality change +/- 20, I've actually made it -25 to +15. This means that the stocks picked are normally worse than (what we might normally consider) average, and they tend to deteriorate in 'quality' over time. Finally, because I'm imagining that the stocks I'm simulating are from the FTSE 250, I take the underlying percentage change in that index and adjust all stocks' base movements by this amount to produce final stock prices for the current month. Just to spell it out with a single example: Stock A has a quality of +20 this month, so, all else being equal, it would rise by 1%. However the FTSE 250 happened to fall by 2.5% this month, so this stock is actually deemed to have fallen by 1.5%. Next month, due to the random quality adjustment, it will have a quality of +5 (and therefore a base share price change of 0.25%), but next month the FTSE will fall by 1.5%, so the stock will actually fall by 1.25%. Hopefully this makes sense (although I'm aware it's probably a long and fairly dull read). Please do let me know your thoughts. Is this even a moderately reasonable simulation of stock price movements? Or is there a different (but hopefully similarly simple) way of producing numbers that better represent reality?
  3. ologhai

    Iceland: A post crash economy

    Maybe the real test of a proper recovery is whether Iceland would do the last decade the same way if the opportunity arose again. More generally, having spent the last two or three years listening to people (both media folks and members of the public) predicting/hoping that the economy will return to 'normal', I feel pretty sure that they would happily settle right back into the high debt, high spend days that went before with hardly a second thought. It'd be nice to be wrong about this.
  4. ologhai

    GOLD

    By the way, is the implication of this chart that, on average, the price of gold has risen at around 9% per year for the last 40 years?
  5. ologhai

    GOLD

    I thought it might be useful to be able to see the 'wrap around' of the first six months copied onto the end of the year. So, just in case anyone else will find it useful: If one were a trader, this 'wrap around' makes it particularly clear that on average, one should stock up in August and sell up at the end of February (the change in price between the end of Feb and Aug is rather dwarfed by what had been the 'usual' growth from Aug to Feb).
  6. Stanford University News: New solar energy conversion process discovered by Stanford engineers could revamp solar power production.
  7. ologhai

    UK House prices: News & Views

    Why would that be? I would've thought that most reputable lenders would take the word (albeit written) from an accountant about the state of the self-employed person's income/profit.
  8. ologhai

    Greece

    I have a two-week Greek holiday coming up towards the end of the summer, and I've been wondering for a while now how concerned I ought to be about going... I wouldn't have thought my concern will stop me going, but still the concern is there.
  9. ologhai

    When to buy B P

    Looks like you might've been about right with this call. I have yet to buy any BP, so I may have missed the chance, at least for a quick buck, but, for good or ill, I did decide to buy a few RDSB shares.
  10. I usually regret getting into these sorts of discussions, but I guess I've made my mistake by even starting on this occasion rather than just letting it go like I usually do... If tea-leaves appeared to be working as a way of picking stocks or getting your timing right, how would you KNOW it was down to the tea-leaves. Would you really be rigorous about noticing when they didn't quite work, or when you let your own stock-picking experience guide your interpretation of the leaves? And then, when they stopped working (i.e. 'until they didn't work' from your reply), why did they stop? Are you sure that, before they stopped, they really were helping? And if they ever meant anything, what on earth could cause them to be meaningless now? This is the whole point. Dr Bubb is a stock picker with many, many years experience. As one plausible-sounding explanation, let's say he lets his great wealth of experience guide his interpretations (along with the phases of the moon or whatever), but then he reports that as, 'Wow, it was the phases of the moon again! What a marvellous technique!' Then he tells everyone about the 'phases of the moon' technique, but, he's so experienced about using all his other methods (based upon charts and fundamentals, and even just good gut feeling because of all those years of experience) that he doesn't he know it has nothing whatsoever (let's assume) to do with the phases of the moon. If someone really WANTS to get to the bottom of what allows them to choose stocks well, and if someone really WANTS to be taken seriously by people who feel they have some appreciation of what it might mean to KNOW something, then my only point is that people ought to try a bit harder than leaping to conclusions so easily. What's so wrong with trying to be sure about your facts that, in my experience whenever I suggest it, I get responses like this. You'd think that people would really want to be sure of their facts, wouldn't you? I mean, isn't that what 'facts' are supposed to be about?
  11. In addition, I know you're not likely to see the point being made here, but... Your success and/or someone else's failure in picking stocks ISN'T PROOF. You must know that you should be attacking the idea, attacking the principle, not attacking the person. That's Day 1 of Logical Fallacies 101.
  12. Ditto. I, however, will not be so blunt as to resort to letting it get to personal 'you are this or that'.
  13. I can't say that a reply like this was unexpected. "Look at my wad. Is that enough proof of astrology for you?" Well, no actually...
  14. Thank you for taking the trouble to be the voice of reason. I'm sorry if this is going to seem like some unwarranted attack, but this kind of reply is not good enough if you want to be taken seriously by anyone other than air-heads. Your reply is not proof. I would imagine that many scientists know how difficult it is to TRULY KNOW something, how easy it is to fool themselves, even when they know full well that they can fool themselves and how easy it is to do. You don't even seem to be aware that it's possible to be fooled by subjective recollections and statistically insignificant anecdotes. Before you go on to retort how successful you are again, be aware that this is not at all what is being questioned. If someone contributes a 'planets lining up' type of claim, then surely it should be up to the claimant to prove (and I mean really prove) their assertions -- well, if they want to be taken seriously by serious people it is. It's very shoddy to simply say, 'Hey, I'm too busy being successful, why don't you try to prove my assertions (or the assertions I re-distribute)'.
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