Beware of the unicorns

This blog mainly covers technology issues and various science. Being trained as a scientist, the world is an immensely complex place with interconnections between various forces in ways within and even beyond human understanding. Our understanding of science and the world is ever evolving. I often see an over simplified line of thinking that appears in religion, philosophy and politics that runs against the concept of complexity and that events are a culmination of many small factors. Even more disturbing, it sometimes appears in various lines of academic thought.



The construct of this over simplification depends on having one entity to blame a multitude of events upon. This powerful entity, whether is be a political or religious group, is often the rival to the organization a member who expresses this line of thought belongs. The mock example below demonstrates how this line of thinking works. I am going to use will use the most dangerous of all creatures, the flatulent unicorn or unicorns for short. The following part of this post will give a problem facing society and how this line of thought works in response.



Cause 1:

Everywhere you look there are too many rainbow colored items and it drives me crazy!

Solution 1:

The unicorns encourage such colorful mythological images from antiquity.



Problem 2:

Many people have their heads in the clouds thinking about fictitious ideas and stories.

Cause 2:

Unicorns are a source of escapism into an ideal world.



Problem 3:

Americans spent too much money accumulating massive amounts of debt they can never pay off.

Cause 3:

Unicorns encourage this through construction of an idealistic world which is accessible to everyone. Spend the money you don't have so you can live in this fantasy world! It is okay.



Problem 4:

People don't spend enough time being productive.

Cause 4:

The unicorns demonstrate the world is a great place without need for hard work. Go ahead and slack off.



Cause 5:

People don't believe in the one true religion any more.

Cause 5:

The mythological world of the unicorn is corrupting people's minds through false religious imagery.



Problem 6:

People are not active in the correct political party any more.

Cause 6:

Unicorn stories demonstrate that things always work out for the best and no action is required. Wish for good things and they will occur!

The solution for problems 1-6, kill the unicorns and eliminate all references!

The list goes on and on and on. Don't get fooled for this line of thinking. It demonstrates a lack of critical thinking about issues. Extremist groups dwell on this kind of thinking blaming one group for all of the world's ills.

Octopus oracle

Usually, I post about science or other serious topics. Today concerns an octopus in Germany who had accurately picks soccer match winners up to this point. Paul, the psychic soccer octopus (picture above) lives in the Oberhausen Sea Life aquarium in the western German city of Oberhausen.

According to the Yahoo! article, the octopus has been accurate in picking winners of the FIFA 2010 World Cup tournament up to this point.

Paul correctly predicted Germany’s wins over Argentina, England, Australia and Ghana and the country’s loss to Spain and Serbia.

This mollusk had a small, cult following in the past beginning in 2008.

Paul first developed his abilities during the 2008 European Championship in which he predicted five out of six games involving Germany correctly. But while he had only a community of local fans two years ago, his World Cup prognostications have brought him international stardom.

It looks like the aquarium put 8 legged prediction maker on the spot by having Paul predict a German game. Not being human, Paul had a politically incorrect answer for a German defeat against Spain in the semifinals. The knives and grills came out after Paul's correct choice leading towards an international political incident.

Spain’s defeat of Germany in the semifinals as predicted by Paul prompted many Germans to wonder about how he would taste grilled for dinner. Spanish Prime Minister Jose Luis Rodriguez Zapatero fretted about the safety of “El Pulpo Paul,” as he’s known in Spain, and offered Paul protection.

“I am concerned about the octopus,” Zapatero said. “I’m thinking about sending in a team to protect the octopus because obviously it was very spectacular that he should get Spain’s victory right from there.”

In response to hundreds of angry e-mails from disappointed German football fans who sent in recipe suggestions for the 2 1/2 year-old floppy mollusk, the aquarium actually did take extra precautions, Porwoll said.

“I even told our guards and people at the entrance to keep a close look at possible for football fans coming after Paul for revenge,” Porwoll said. He added, however, that the number of love declarations the aquarium is receiving from Paul’s fans far outweighed the hate mail.

Paul most likely taught us a good lesson, people hear what they want to hear and not the truth. This even pertains to an oracle octopus.

If I could find a small aquarium creature with clairvoyant powers like Paul, Vegas watch out!

Vader in psychotherapy

This Yahoo! posting is funny. Darth Vader was analyzed for psychological disorders by a group of French researchers. This strikes me as being strange, because are we American's culturally inferior (according to the French) to Europeans? It appears they respect good American movies though. Moving on to subject at hand.

After analysis of Lord Vader's behavior in the six Star Wars episodes, their conclusion was Vader has borderline personality disorder (BPD). Their diagnosis of the Sith,

His enemies and underlings are painfully aware that Darth Vader is highly irritable and prone to bursts of anger. But until now, we don't think anybody knew that the Dark Lord of the Sith may have suffered from borderline personality disorder.

According to a popular blog over at CNN, French researchers have concluded that Mr. Vader (aka Anakin Skywalker) has, at various times, exhibited six of the nine criteria for borderline personality disorder. To be diagnosed with BPD, you need only showcase five of the behaviors.

They go onto address his unstable relationships with his son, wife and other family members. One may ask, what is BPD? Wikipedia defines it as in the link above (links do not work in quote below),

Borderline personality disorder (BPD) is a personality disorder defined in DSM-IV and described as a prolonged disturbance of personality function in a person (generally over the age of eighteen years, although it is also found in adolescents), characterized by depth and variability of moods.^[1] The disorder typically involves unusual levels of instability in mood; black and white thinking, or splitting; chaotic and unstable interpersonal relationships, self-image, identity, and behavior; as well as a disturbance in the individual's sense of self. In extreme cases, this disturbance in the sense of self can lead to periods of dissociation.^[2]

I am glad the French are doing cutting edge research. At least, it is entertaining.

Market observations

In a prior post, Markets and psychology, I mentioned a market theory known as Elliot wave principle. Elliot wave principle states the markets move in five wave fractal shapes dependent upon investor sentiment. It is a tool based upon probabilities estimating future outcomes. The theory gives investors windows of buying and selling opportunities.

I have encountered difficulty using this theory within the last week. If one examines stock charts over long periods of time, the wave can be easily identified in the data. Sometimes, the waves are not clear as they are being formed. For example, on February 9 I predicted we were on this step in the current Cycle:

Primary = 3 of 5
Intermediate = 1 of 5
Minor = 2 of 3
Minute (not sure)

After about a week of market action, this stage in the Cycle has yet to be fulfilled. My current guess as of today's close (2/17) is:
Primary = 3 of 5
Intermediate = 1 of 5
Minor = end of 2
Minute (still not sure)
I was assuming the Minor 2 of 3 was unfolding as we had entered into the 3rd Minor wave. Further market action completed a nice rebound 2nd Minor wave demonstrating we were not that far into the overall wave structure yet. The 3rd Minor is coming at a later date.

What went wrong? Two things come to mind.
1. I had my investments ready for a 3 of 3 Minor movement. My bias.
2. Other more experienced bloggers I follow came to the same conclusion. The waves were unclear as they were being traced.

It is now obvious what the wave patterns are, not so in real time. Stock market investing in general follows this unknown path. Mr. Market will move as Mr. Market chooses. As Yogi Berra said, "It's tough to make predictions, especially about the future."

Markets and psychology

This post covers a topic of interest to me, the stock market. I mentioned in a previous post, driving with the rearview mirror, about some basic concepts of the stock market. Several months have passed since my last market posting. Accordingly, I have been studying and stock trading resulting in both failure and success. The more I watch the market, the easier it is to understand that investor psychology drives the market.

One technique that I am studying is Elliot wave principle (EWP) developed in the 1930's by Ralph Nelson Elliot. Elliot observed that markets move in 5 distinct sets of waves according to prevalent market psychology. When in a bull market, impulse waves move the market up. In a bear market, impulse waves move it down. Waves 1, 3 and 5 are the impulse waves, while 2 and 4 are the corrective waves. Impulse waves are further subdivided into smaller sets of 5 fractal waves. Corrective waves have an a-b-c wedge like pattern and are also subdivided into smaller waves. The time span of the waves are from decades to hours on ticker charts. To be honest, the larger waves on the order of days (Minute) up to years (Primary) follow this pattern making distinctive patterns on ticker charts. Time spans greater than several years and less than several days tend not to fit into exact scenarios. It is just wishful thinking putting noisy or irrelevant data into such a pattern in my opinion. The take home message is Elliot wave principle follows what truly drives a market, investor sentiment.

Elliot wave principle is a loose theory, it has multiple outcomes during any given situation. Market timing and wave amplitudes are based upon Fibonacci numbers. Exact values fit into a range. Here is where EWP is useful, it tells us approximately when the market will turn and to the approximate degree a rally or sell-off will carry a market. It determines buying or selling windows ahead of time. I suggest using other technical indicators (MACD, stochastic and etc.) as complimentary tools when waves are not clear, which often waves are unclear. Investigation of the stock's price movement (who owns it and why) will further help an investor.

In practical application, I believe as of February 9, 2010 we are in a bear market at the following point in a Cycle. This means the overall market movement is downward.
Primary = 1 of 3
Intermediate = 1 of 5
Minor = 2 of 3
Minute (not sure)
Using this, I made a successful and unsuccessful trade. The unsuccessful trade occurred because of undesired price movement premarket. My blunder even as the stock moved in the desired predicted direction. This is why the system is not going to make anyone rich without following good trading practices.

I will post further on this topic to see if my evaluation and Elliot wave principle holds true.

Football strategy part 2

The results of the first round of the playoffs are in and my predictions were wrong in my last post, Football strategy. I predicted the following and we can compare them with actual results below:

Predicted:
Bengals
Cardinals
Eagles

Actual:
Jets
Cardinals
Cowboys

Total Correct: 1 of 3

Looking at the true games outcomes, I should stay away from Vegas and save my money with an accuracy of only 33%.

My theory had the coaches on the losing teams the week before intentionally not putting forth their best game. The losing coaches had nothing serious to gain by winning the last regular season games and were not willing to risk revealing to their opponents their top strategies or injuring their stars. The coaches were holding back in the following manners:
1. Top players had limited play time
2. Most successful plays were not utilized
3. Experimental plays were brought into the playbook
In comparison, the winning teams during the last game of the regular season had no other option but to bring forth their best game and win. This lead to an imbalance in preparing for the playoff game. The losing team in the regular season's game knew what the best plays and match ups their opponents possess. In addition, the loser also had the advantage of trying various plays on their opponents allowing them to weed out the bad plays. The winning side was in the dark concerning the best plays of their opposition.

Any one who knows something about football realizes there are hundreds of factors contributing to a successful victory. Talent, coaching, team spirit, mistakes, luck, homefield advantage and on-field execution are to name a few. What this blog theory exercise demonstrated was the advantage a team gains by playing this coy coaching strategy is insignificant.

I smell nothing but a continuous winning streak by the Cowboys. Go Cowboys!

Football strategy

As I am starting this post, it is 4:09 PM Central Standard Time to track this statement. I will make a follow up to confirm or deny my theory. My theory has to do with NFL football and first round playoff wins due to intentional coaching influence on a team. For some reason this year, three of four first round playoffs had the same teams play each other one week before in the last game of the regular season. The games are:
Philadelphia Eagles - Dallas Cowboys
Cincinnati Bengals - New York Jets
Green Bay Packers - Arizona Cardinals
What is of interest last week is the teams that had nothing significant to gain lost. Accordingly, teams that had something significant to gain won. The Cowboys, Jets and Packers won. If two teams did not win, they were going to either be eliminated from playoff contention (Jets) or lose home field advantage in the first round (Cowboys). The Cowboys also had to save face after the brutal loss last year during the last game of the year ('08 season) to the Eagles, 44-6. The Packers had nothing to gain or lose in their victory.

It was no accident the prior week's outcomes happened. What makes it even more so suspicious is the lopsided manner the winning teams achieved their victories with the following scores:
24-0
33-7
0-37
It has to do with coaching strategy and the advantage these teams will gain in the first round playoffs contributed to these extreme scores. The playoffs advantage far outweighed the one win in the team's regular season's record. I predict that the following teams will win in the first round of playoffs: Eagles, Bengals and Cardinals. What is being tested is the effect of coaching and player psychology in a team's success. I will further extrapolate in the next post.

To put forth my bias, I am a Cowboys fan living in Texas. I deeply hope that my theory is faulty and that the Cowboys beat the snot out of the Eagles. Go Cowboys!