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Fundamental articles: Post hoc ergo propter hoc. Really?

I wonder are there some other particular fundamental situations as the present one on EUR/CHF. I am interested in that kind of fundamental situation, because we may try to build up a quantitative model to profit from that particular situation. 

I am not really interested by the the fundamental data like that:

Forex: EUR/JPY falls below 103.00 after Fitch downgrades

It is always for the past. And most of the fundamental information provided constantly by the most of the sites is a complete rubbish for me of no use. Most of the analysis are completely discretianory the EUR/USD did that because of that, or because that. I would like to cite Wikipedia.

Post hoc ergo propter hocLatin for "after this, therefore because of this," is a logical fallacy (of the questionable cause variety) that states, "Since that event followed this one, that event must have been caused by this one." It is often shortened to simply post hoc and is also sometimes referred to as false causecoincidental correlation, or correlation not causation

Post hoc is a particularly tempting error because temporal sequence appears to be integral to causality. The fallacy lies in coming to a conclusion based solely on the order of events, rather than taking into account other factors that might rule out the connection.

 

I mean that using judgemental methods does not mean to apply a free style judgemental anlysis. In reality we are constanlty attacked, bombarded with that kind of information from everywhere. Most of the time you can read opinions that the same fundamental information can explain contradictory consequences. 

Well I happen to read one very interesting book. The book is Principles of forecasting: A handbook for researchers and practitionners. editted by Scott Armstrong.

The judgemental analysis does not mean that there are no structured methods that can eventually boost the predictability.

For example as for the fundamental analysis it is possible to extract some key fundamental data that can historiacally explain the movement of the instrument. What is really important and what is secondary?

That I really I never see on most of the fundamental articles.

Text mining is not easy ;) 

 

 

 

Comments

  • Jack1 4079 days ago

    Big guys are focus on fundamental factors as hiden market drive force. Not much talking on current fundy drive factors when market is moving. Only it will clear to know after the market swing nearly end.

    Big guys have their fundamental models in their computers. I am learning in this area. Now, I still read papers, find and follow the expert in this area. Prof. Menzie D. Chinn is a leading expert in this area I feel.

    Google "Macro Approaches to Foreign Exchange Determination by Menzie D. Chinn". Follow him, you may catch some fish: small or big fish ?

  • Jack1 4079 days ago

    Google "Nonlinearities, Business Cycles and Exchange Rates by Menzie D. Chinn". Taylor rule fundamentals model is talked in this paper. Bloomberg got this model for big guys to see Taylor rule model.

    Some famous fx experts like Taylor from fxConcept - hedge fund, Jimmy Roger, UBS's Yu, etc often be interviewed by Bloomberg. Closely follow their talking on funcamental opinion. I like to hear their talking, their talking reepresent their mind set. There is always somebody to come out to promote some idea quietly and very early. Their code would be understood by them only. Take time to understand them.

  • Jack1 4079 days ago

    Bloomberg's Michael McKee program "Bloomberg on the Economy" is good. http://www.bloomberg.com/podcasts/on-the-economy/

    Deutsche Bank's Mayer Discusses European Debt Crisis (Audio)

     

  • JohnLast 4079 days ago

    The idea from the book of  Principles of forecasting is that you make a panel of experts (and there are mathodologies in doing that). However who has backtested J.Rogers and alia. I take them as any other model. Haha backtest J. Rogers a nice joke. 

     

  • Jack1 4079 days ago

    fundy scorecard:

    1. interest rate spread favour euro.

    2. inflation expectation favour usd.

    3. growth expectation favour usd.

    4. safety view favour usd.

    So, euro is still in down mode. Next downside level will be 1.2800, then, enroute to 1.2050 zone before Xmas.

     

  • Jack1 4079 days ago

    J Roger is former hedge fund big guy. He bought $usd in July, and he hold Gold for 2 years before. Roger model is ok for backtest, I believe. Lot of big guys in USA and Asian follow him.

     

  • JohnLast 4079 days ago

    Thanks for the scorecard. 

  • JohnLast 3997 days ago

    Jack1 I would say excellent fundamental analysis. Great man.

    You were very accurate 82 days ago.