Scientists Develop Financial Turing Test

KentuckyFC writes writes to share a new online test that is being touted as the "financial Turing test." The web-based exercise asks users to distinguish between real and randomly generated financial data. "Various economists argue that the efficiency of a market ought to be clearly evident in the returns it produces. They say that the more efficient it is, the more random its returns will be and a perfect market should be completely random. That would appear to give the lie to the widespread belief that humans are unable to tell the difference between financial market returns and, say, a sequence of coin tosses. However, there is good evidence that financial markets are not random (although they do not appear to be predictable either). Now a group of scientists have developed a financial Turing test to find out whether humans can distinguish real financial data from the same data randomly rearranged. Anybody can take the test and the results indicate that humans are actually rather good at this kind of pattern recognition."

Comments

Not predictable?

[Colin Smith]

Yeah, lots of noise at the daily level, but beyond that the signals emerge.

e.g.

ftse 100
http://uk.finance.yahoo.com/q/bc?s=^FTSE&t=my&l=on&z=m&q=l&c=

dow jones
http://uk.finance.yahoo.com/q/bc?s=^DJI&t=my&l=on&z=m&q=l&c=

The markets are powered primarily by inflation (forget CPI figures, they're heavily manipulated to look good, look at credit creation). August 15th 1971, the fundamental nature of money changed, debt became money, debt pays interest. Expansion in credit loaned into existence (by banks) is followed by collapse because of the interest. You should also take a look at interest rates over the period (couldn't find an online chart).

We've been living on bubbles for the last 30 years (there are many smaller credit bubbles in the charts before that), and will continue to do so until the money men lose their influence with the state... It's been 300 years in the UK so far.