Bargain Hunter

Predicting the Future

With the relatively easily available daily price data of known stocks, you could fall into the trap of feeding an artificial intelligence network historical stock price data and trying to predict future price jumps. Then, armed with this knowledge, you could make a massive investment and sit back and wait for payday. Ha! However, the timeless arguments from the bestseller A Random Walk down Wall Street [5], which are no longer entirely new but all still valid, speak against this, stating that, in this case, the millions of market participants with similar ideas would quickly close any wormholes in the time structure, if they actually existed, because they would have known about possible price jumps at the same time and would have reaped the profits way before the crusading private investor.

There's no easy money to be made at the exchanges, I'm afraid, or is there? Are the exchanges just glorified casinos and follow the "random walk" theory [6], not because their development is actually random, but because prices are unpredictable? You're free to prove the random walker disciples wrong, of course. Try it; it could be lucrative, if it works!

Infos

  1. "Google Finance as you know it is going away": https://www.marketwatch.com/story/google-finance-as-you-know-it-is-going-away-here-is-what-will-remain-2017-09-27
  2. "Has Yahoo finance web service disappeared?": https://stackoverflow.com/questions/38355075
  3. Listings for this article: ftp://ftp.linux-magazine.com/pub/listings/linux-magazine.com/210/
  4. "Watchful Seller" by Michael Schilli, Linux Magazine, issue 188, July 2016, http://www.linux-magazine.com/Issues/2016/188/Perl-Monitoring-Payments
  5. Malkiel, Burton G. A Random Walk down Wall Street: The Time-Tested Strategy for Successful Investing. W. W. Norton & Company, 2016: https://www.amazon.com/Random-Walk-down-Wall-Street/dp/0393352242
  6. Random walk theory: https://en.wikipedia.org/wiki/Random_walk

The Author

Mike Schilli works as a software engineer in the San Francisco Bay area, California. Each month in his column, which has been running since 1997, he researches practical applications of various programming languages. If you go to mailto:mschilli@perlmeister.com he will gladly answer any questions.

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