Thou can’t not covet
Wanting what others have may be hardwired in the brain
http://www.sciencenews.org/view/generic/id/340905/title/Thou_can%E2%80%99t_not_covet
I tried to make a case for investor herd behavior when I was in my finance class, but was pretty roundly jeered by my professor and his fellow finance students. I remain (as is so critical to my core personality) stubbornly convinced I am on to something as the behavior of the market, to me, anyway, remains impossible to discern unless one accepts irrational behavior on the part of the investor community (increasingly, it is necessary to account for fraud and criminal activity as well, witness the Facebook IPO). The above mentioned article provides an argument that this sort of behavior is hard-wired into humans and the idea that there are not any rational humans might result in the end of the study of economics (which, as far as I am concerned, has teetered on the verge of irrelevance for its entire existence, since at its core it assumes that humans act rationally).
I can imagine that if one were to accept that humans behave irrationally, have ‘herd instinct’ and often act contrary to their own best interests, one could make a killing in the stock market. I have tried a number of times to find backers to build a genetic program-based machine learning algorithm to predict market movements, though in recent years I had come to accept that the market is really random, thus not subject to prediction. I am re-thinking, though, that since it is almost always possible (though, since humans are meaning making machines and are so good at lying to themselves, it might all be smoke and mirrors) to retroactively look at market behavior and add-in some psychology and ‘predict’ (wouldn’t that be post-dict?) the behavior, perhaps my program might be able to anticipate the idiot decisions humans make and produce a mint’s worth of money.
Too bad I have never been able to get any backers for my project…
