Economics: science or not?

[iNow]

Wouldn't one need to predict a) how much stock and b) which stock they buy for that test to be valid or useful? Merely predicting a stock purchase seems to have too many confounding variables, and is a 50/50 chance at the start. This suggests to me a low utility, and not a predictive test, but I may be mistaken.

[J.C.MacSwell]

Right. So, uh... still no falsifiable predictions, I see.

 

Tomorrow I will buy a sandwich.

[The Bear's Key]

Since I already mentioned one, how about this...

Nothing groundbreaking there, it's the way stocks work. People either invest for long-term quality, or fast returns. History shows us that people have consistently jumped on a quickly rising market until the bubble popped, which then results in a sell-off panic.

 

The idea is that if a plot of the logarithm of the market's value over time deviates upwards from a straight line, it's

a clear warning

that people are investing simply because the market is rising rather than paying heed to the intrinsic worth of companies.

They're just calculating about when the panic (i.e. climax or reversal) will hit, based on numbers, patterns, and foreseeable reactions. That's more like statistics -- which actually is math, not a science.

 

"A clear warning" also doesn't qualify as science.

 

 

Their model, which employs concepts from the physics of complex atomic systems...

Does it employ 1) mathematical, or 2) scientific, concepts from the physics of atomic systems? Important distinction there.

 

 

Below are excerpts from the arxiv paper...

It must be noted that a good fit of the model to the data series is not a 100% certainty for a crash, but it clearly points at a bubble formation. A critical point leads to a change in dynamics. Here the crash is most likely, but there exist a small yet finite possibility that the bubble will deflate more gently.

........

By the very nature of the model, this result gives us two conclusions. Firstly, there exists a bubble in the Shanghai Composite Index. Secondly, it will reach a critical level around July 17-27, 2009. This will lead to a change in regime which may be a crash or a more gently bubble deflation.

From what I can see they've got nothing definite -- although with time, improvements to the calculated forecasts are possible.

 

But what's easy to notice, is that if by law the relevant stocks were frozen in response to a detected panic selling....a good number of these critical market plunges, and its resulting dominoes effect, might be avoidable. It'd give investors a chance to relax with a deep breath, and for the market to stabilize from its hysteria.

 

 

Tomorrow I will buy a sandwich.

Influencing the results, aren't you?

[Capita]

I would definitely say no. All because some one knows business does not mean they can control it. Science is testable repeatable and predictable, knowing the rules of science can help you predict the out come. Simply knowing the rules of economics does not guarantee any thing and the same result will never happen twice. It is I my eyes controlled by the elite who have money and the common people that do good are far and few. The common people that do well are few who have a good idea and manage the money well, most get rich mismanage the money and hit rock bottom all over again.