CAVEAT BETTOR, YOU NEED A GLOBAL MODEL TO BE ABLE TO PREDICT FUTURE TEMPERATURES.
Chris F. Masse April 18th, 2007
Caveat Bettor, to answer your post, I would say that:
#1. The average temperature of the Planet Earth is difficult to get. Think of the difficulty to gather the data from the different points (Virginia, the North Pole, South Africa, the oceans, the French Riviera, the Canadian big lakes, Indonesia, etc.).
#2. The scientists don’t have a perfect global model, yet.
TAKEAWAY: I understand that many traders would believe in “global warming” and buy up such an event derivative, but where would they get advanced indicators on future temperatures?? Past data is not of help if you don’t know how to interpret them. You don’t just buy up a global warming event derivative just because temperatures have risen in the past and that you believe religiously in global warming.
- Analysis (Meta) , Science
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Uhh, Chris, people buy stuff all the time that is not good for them.
Look at lottery tickets–you put down a dollar to win 30 - 35 cents. First, the lottery masters keep a third of the collection for overhead and public financing. Then they payout the other two-thirds. Then they tax the two-thirds. And remember, that dollar was after-tax money.
People will buy this. If priced aggressively enough, I will sell it.
Our risk models are not perfect, either. Ever hear about LTCM or Amaranth? So don’t hide behind that shrubbery.
When things get difficult, that’s when prediction markets can inject some information. Sure, it won’t be perfect information. But, you and I agree, markets outperform polls when it comes to revealing the truth.
http://caveatbettor.blogspot.c.....en-it.html
Got your point.
I have tried to find objections to your point… because I’ve very prudent when I trade. I believe in… doubt.
Chris, I believe in doubt, too. But sometimes, one must doubt one’s doubts.
All things socratic and scientific require rejection to move forward. Yet neither are fallible, dial back to any decade or previous century, and look at the assumptions say, under the discipline of physics. Only in the last few days has the New England Journal of Medicine come out with post-motem analysis on what was SCIENTIFIC hormone replacement treatments … and the increase in the incidence of breast cancer.
So, don’t reject as a knee-jerk instinct. And learn to doubt your doubts. Acceptance is the other half of the mystery we call Truth.
OK. Thanks.
Psstt… Cav, take a look at my ProTrade story. It is receiving thousands of hits today, because Andrew Sullivan is linking to it.
http://www.midasoracle.org/200.....-athletes/
See whether you can make a smart comment over there…
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