Comment author:thomblake
11 May 2011 08:15:34PM
5 points
[-]

The point of the article was that the subject really does anticipate different market outcomes to different extents, and that uncertainty can be represented using probability. Thus the 100 minutes of preparation time could be divided up usefully by spending n minutes on each justification, where n is reached by multiplying the probability of the outcome by 100 minutes.

For example, if you believe that the stock has a 60% chance of going up, a 35% chance of going down, and a 4.99% chance of staying the same, then you could spend 60 minutes preparing explanations of why it went up, 35 minutes preparing explanations of why it went down, 4.99 minutes preparing explanations of why it stayed the same, and .01 minutes fretting that you've forgotten one of the things that stocks can do.

You're probably right about the emotional state of pundits, but that wasn't really relevant to the point of the story.

## Comments (16)

OldThe point of the article was that the subject really does anticipate different market outcomes to different extents, and that uncertainty can be represented using probability. Thus the 100 minutes of preparation time could be divided up usefully by spending n minutes on each justification, where n is reached by multiplying the probability of the outcome by 100 minutes.

For example, if you believe that the stock has a 60% chance of going up, a 35% chance of going down, and a 4.99% chance of staying the same, then you could spend 60 minutes preparing explanations of why it went up, 35 minutes preparing explanations of why it went down, 4.99 minutes preparing explanations of why it stayed the same, and .01 minutes fretting that you've forgotten one of the things that stocks can do.

You're probably right about the emotional state of pundits, but that wasn't really relevant to the point of the story.

Welcome to Less Wrong! It might be worth checking out Bayes' Theorem.

*4 points [-]This solution is the Kelly strategy. It isn't generally optimal, but this makes it optimal in this case:

Nice - I'm not sure if I've encountered that strategy before.