From: John Clark (jonkc@worldnet.att.net)
Date: Sat Oct 23 1999 - 11:05:21 MDT
Robin Hanson <rhanson@gmu.edu> Wrote:
>Shiller then *tests* this expectation
> by looking at real data. If you're going to then dismiss his analysis
> as "technical" because it refers to real data, then you seem to me to
> be saying that you are so sure that you are right about stocks that data
> is irrelevant.
Yes, Shiller looked at data, he looked at a mountain of it until he
found two variables that produced a straight line for a while.
He doesn't say why they give a better picture of reality than
thousands of other variables, he doesn't explain why a deviation
from that straight line should be a cause for worry. That's why I call it
"technical analysis".
I have another even more fundamental objection, it hasn't worked.
It has been nearly 4 years since the prediction, not a trivial fraction
of a human lifetime, and in that time the market has exploded upward.
Someday we'll enter a down market but even if it crashed tomorrow
I wouldn't be impressed with Shiller's predictive ability. Even a stopped
clock is right twice a day.
John K Clark jonkc@att.net
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