“How we use mathematics to bring order to financial markets…”

Trend following insights:

Once you realised you are forecasting probability distribution conditional upon knowing something, then you can leave the technical analysis behind. You can then research conditional probability distribution on anything.

It is very advantageous to understand the level of uncertainty in the inferences you are making, and this is a fundamental mistake that human investors make.

Obviously, you can try and reduce that uncertainty by knowing more and more about the situation, like Warren Buffett. He reduces the uncertainty as much as he can by knowing as much as it is possible to know. That is a very different style to ours.

We have a much higher level of uncertainty than Warren Buffett when he makes an investment. But we have a much bigger and more dynamic portfolio. There are lots of ways to skin a cat, or lots of roads to Rome. My view is the success of our approach does not invalidate anybody else’s.

That is maybe not the only thing, but that is what I was: sufficiently desperate and needing to prove a point. Having these various motivations is what it takes to make you start a company–it does not just happen over a year and a half.

If you don’t know about this, dive in.

Source: Lawrence Gosling, Winton Capital’s Harding: How we use mathematics to bring order to financial markets. Investment Week, February 24, 2016. See http://www.investmentweek.co.uk/investment-week/interview/2447802/winton-capitals-harding-how-we-use-mathematics-to-bring-order-to-financial-markets.

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