Nobel Inspiration

Feedback today:

“Dear Michael: I have been convert and believer in trend following for nearly a decade now. Read your book a couple of years ago and visit your site regularly. Thank you for giving us a wealth of information and perspectives. Recently while, researching, I came across a speech by Friedrich August von Hayek, the winner of the 1974 Nobel Prize for economics. In his Nobel Prize Lecture, surprisingly titled The Pretence of Knowledge, the noted economist, philosopher and neuroscientist, Friedrich August von Hayek spoke at length about limitations in human cognitive processes. In the area of social sciences, we have to deal with what he called the ‘phenomena of organized complexity’. He explained organized complexity as the phenomenon whereby the nature of units are determined not only by the individual elements of which they are composed, and the relative frequency with which they occur, but also on the manner in which the individual elements are connected to one another. Therefore we cannot draw any general inferences and make specific predictions about the units without having complete information about each element. Since such complete information is unattainable, the best we can achieve is ‘pattern predictions’ that limit itself to general attributes about the units but not specific predictions about the individual elements that make up the unit. This is something worth bearing in mind when choosing an investment process. Any reliance solely on specific predictions about the various factors that are in play in the financial markets may prove to be unreliable. It is much safer to rely on pattern predictions. With a healthy dose of risk management of course something like a systematic trend following model perhaps.”
Kind regards, XXX Investment Manager,
XXX Partners Asset Management,
London

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You might like my 2017 epic release: Trend Following: How to Make a Fortune in Bull, Bear and Black Swan Markets (Fifth Edition). Revised and extended with twice as much content.