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why are all these clever/respectable people pushing something that seems like such obvious gunk??
The truth is, even most highly respectable/smart people do not have a deep understanding of econometric modeling.
The subset of people who actually understand the math behind the models is extremely tiny. Including among people who have Masters in Econ/Finance. IMO learning it in a class, even getting an A in the class, is not really enough. Because the classes just teach you how to use the models, but you don't really spend time tinkering with the underlying assumptions or thinking too hard about what falsifies the models.
It kinda takes years of tinkering in the depths of the math, trying to build your own models, answering objections to them by other people, that builds your ability to deeply understand the models. Usually the only people who ever do that are people in PhD programs.
the classes just teach you how to use the models, but you don't really spend time tinkering with the underlying assumptions or thinking too hard about what falsifies the models.
Guess that made me a bad student, then?? I basically did the opposite, focused on figuring out what was happening and the assumption, specify model etc, and then the exact commands in Stata later.
Quite a few of these people are PhDs, e.g. the physicist Giovanni-something. They usually have an astonishing grasp of math
Quite a few of these people are PhDs, e.g. the physicist Giovanni-something. They usually have an astonishing grasp of math
Ah, yeah, another common problem with people who are good at math from other fields trying to comment on economics. Econometric theory isn't just math. It's a close connection between math, the underlying economics, and how your assumptions tie the underlying economics to the math. I find that people coming from a physics/engineering background often fail to grasp that. Because they are used to modeling physical systems where the underlying assumptions are natural law and (afaict) 100% accurate to how the world behaves. Not so for economics/finance.
As someone with both a physics and econ background, I like to offend physicists by saying econ is harder than physics. (Because of the assumptions issue, but also because of some self-referentiality in what we do. How people think about econ actually affects how the economy behaves. But how we think about physics doesn't affect how nature behaves.)
And yet with all your education you cannot seem to manage to attach a LN wallet and engage in the P2P V4V sats denominated ethos of Stacker News.
Just another big talk no walk hypocrit.
~lol and we were just talking about assumptions
Either you cannot be bothered attaching wallets or you are deliberately concealing their attachment preventing other users from knowing if you have made any efort to enable and support SNs sats denominated P2P V4V ethos.
Why don't you provide PoW (horse and gun) that you do support the SNs V4V P2P sats denominated ethos?
Silence.
Do not trust- verify.
Nobody verify that you support the V4V P2P sats denominated ethos so may quite reasonably choose not to not zap you any sats. . . because your credibility and thus content and value, is compromised.
hheeeeehe, yeah that's definitely how you annoy the kings of the "hard" sciences :) wishy-washy economics be harder
No, that makes you a good student. Thinking about the underlying assumptions is what differentiates an "economist" from a "technician". When we were hiring for new faculty positions, sometimes people would say of a fresh grad, "That guy's just a technician," referencing the idea that they were good with the math, but they weren't thinking carefully about the underlying economics.
I remember sitting in ecmt labs with people just discussing with the TA or professor "what's the command for that? Do we have a test for that?" Having no idea what they were investigating or actually doing
Basically memorizing, if problem, then run y command
Indeed. That's 90% of students. Even the good ones.
All models are flawed. Some models are useful.
Yes, models like this (assuming they're predictive) are useful for long-term financial planning.
I've been doing that recently to try to figure out when I might be able to semi-retire. High precision isn't what I need, just a reasonable ballpark estimate.
Not this one
Is there a bitcoin price forecasting model that's been more accurate over a long timeframe?
I'm not convinced that's particularly relevant. Also, they should provide some goodness of fit against actual prices then — because there's quite some variability there — not an artificially smoothed-out line.
Here's my conceptual problem:
If I take a growing industry of any kind, and slap an exponential or power law function on its growth, AND give it wide bands (e.g., these guys say 0.5x multiple = bargain, 3-4x = expensive), as long as the thing doesn't die — big question mark for bitcoin on that one currently — I'm pretty much bound to look like a genius.
Again, kind of trivial: you've set yourself up for a massive goal, expanded the target zone of the bullseye to cover almost the entire wall
add-on: unfalsifiable aspects. If bitcoin dropped to outside their lower bound (at 61k currently), would that invalidate the thesis? No, they'd just say it's massive value... at any and every price down to zero.
Conditional on bitcoin not dying, it's kind of a high probability that it'll trade within their stupidly large range
Tldr, they've set themselves up to look good, it's mostly just luck and mathematical theatre
- This could be checked. Have other assets with similarly huge runups followed a power curve this closely for this long?
- If some rapidly appreciating assets do tend to follow this curve, then that's a reason to expect bitcoin to follow this particular curve, too, rather than the infinite set of other possible curves.
- If damn near every asset follows this curve (with different parameters, obvs), then it's the fit parameters that are the interesting parts.
Conditional on bitcoin not dying, it's kind of a high probability that it'll trade within their stupidly large range
This isn't right. If bitcoin stabilized at $60k, it would be highly divergent from their bands very quickly.
Now, if you're saying that it can't do that without dying, then I think you're sort of making their point.
All very good explanations for what's going on, thank you
Yeah, any model based on a simple time series is inherently flawed.
How can one construct a model when the unit of account ($) isn't a constant? This is particularly relevant for the 2020-21 era stimulus which saw 20-30% inflation across many assets.
How can you say that the model is useful if the predicted ranges are so large? For example, this model implies a current BTC price of anywhere between $52k and $528k:
https://charts.bitbo.io/long-term-power-law/
How can it possibly account for macro-scale events which aren't guaranteed to happen but completely change the price behavior of the asset (ETF approvals, MSTR, etc.)?
But to answer your question,
A few takes: