3 thoughts on “Will This Relationship Always Hold?

  1. Of course not, you of all people who decries looking at economics when trading, should not even be considering this question, may I say you are a dummy without being called vulgar?
    Money seeks highest return,….so EUR and DJIA currently provide that, but with more risk. If the USD becomes stronger, and if the Fed raises to higher than the ECB, then money sloshes on over to the USD and the EUR sinks, but maybe also the DJIA depending on circumstances at that time. Do I have to remind you again? Trend following! You say pay no attention to that economist behind the curtin working the bellows,….but you just did!
    You dummy.

  2. @Rose:

    From a purely conversational point, you may be wrong by saying “of course not,” to the question of if that relationship will always hold. Maybe it will.

    But I believe you have missed the point that Michael was making, and that is: what are you going DO based on that information? Is that something you can build a trading system around? It is the difference between understanding, so to speak, and acting on information that you believe you understand.

    Correlations have some very significant uses. I, for one, am scared of them. They are based on many assumptions, and at the end of the day a correlation may just be a fluke, even if it is 100% correlated at the moment.

    The ultimate question is not, is this information right, it is, what am I going to do with this information that I think is right?

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