Control or Chaos - Bullwinkle Too
Reliable Data Sets
Because the achievement of certain values is the essence of life, it is also necessary to have defense mechanisms for dealing with threats. For plant life, it is automatic and for animals it is instinctual - and for people, we have immune systems and tools of logic for dealing with the natural world and man-made force.
But reason is not automatic and there is a big difference between the two. While the universe is orderly and knowable, human action is unpredictable and can be irrational. And to compound the possible threats, when irrational people have governing authority over the uncertainty of complex systems, chaos is the inevitable result. In Moneyball Method terms, “When policy makers degrade money, prices, markets and profits - for the greater good, the ensuing economic chaos and market volatility demands that you have a contingency plan.”
To the objective investor, it stands to reason that investment strategy decisions are grounded in the determining factors of capital market behavior. Furthermore, a contingency plan is only as good as its data and assumptions. In Moneyball terms, “The law of identity requires certain attributes for all the exist and the law of identity requires them to behave according. The same is true for objectively defined asset classes.” As obvious as this may sound, it almost never happens that way.
Most individual investors do not have explicitly defined financial objectives, so they measure performance against arbitrary benchmarks, “By combining the intrinsic value of market tactics with the subjective value of risk tolerance questionnaires, investors paid for the opportunity to underperform.” Most firms make strategy recommendations based on subjective forecasts, meaning potential assumption errors: “Each additional asset class brings three new and potential errors – correlation, standard deviation and median return.”
And most software providers will use capital market data sets that have been altered to be popular, “To arbitrarily remove historical data that includes large deviations for the sake of being conservative is grave error.” To quote one of them, “Since we are trying to put a cap on our income, as well as tell the software how much you would like to spend, it is blowing a fuse in the Test Plan.” Translating the chaos is Rocket J. Squirrel, “Bullwinkle, it says here for you to inherit your fortune, you have to spend the weekend in the ancestral home. Abominable Manor.”
Fortunately, there is individual control, “Moneyball reverse everything! Instead of predicting the future and measuring performance in the rear-view mirror, the objective investor chooses the destination and uses historical data for navigational chart.” To learn more, please click the link below:
https://www.amazon.com/Moneyball-Method-Middle-Class-Manifesto-Objective/dp/1696009111/