Shocking? Not really. If we assume a 50-50 chance of rising, we should expect this to occur once every ten years, and it did not happen in the prior ten. Below is the actual frequency of 'runs' (consecutive trending), compared to the 50-50 theoretical (actual markets go up 52% of days, but that's not material here).
Now it's 11.
ReplyDeleteHow likely is a run of 11?
Would it be 1 in a 1000 years or 1 in 50 years or 1 in 100 years?
what about 12.
could you extend the chart out to 15, just in case?
I thought I was the dumbest commentator on this blog - reading the above makes it clear that I'm not even close!
ReplyDelete@10:34, that's not clear at all.
ReplyDelete@ 1st comment:
ReplyDelete.5 x .5 x.5 ...... .5^11 or .5^12......you get the idea.
"@ 1st comment:
ReplyDelete.5 x .5 x.5 ...... .5^11 or .5^12......you get the idea."
Actually that's not the correct way to do it, but it's close. You are looking at X number of runs out of all potential runs possible since NAsdaq's existence.
I was just illustrating a simple rule-of-thumb approach.
ReplyDelete