The New Finance focused on the market's major systematic mistake. In failing to appreciate the strength of competitive forces in a market economy, it over estimates the length of the short run. In doing so, it overreacts to records of success and failure for individual companies, driving the prices of successful firms too high and their unsuccessful counterparts too low.

The New Finance focused on the market's major systematic mistake. In failing to appreciate the strength of competitive forces in a market economy, it over estimates the length of the short run. In doing so, it overreacts to records of success and failure for individual companies, driving the prices of successful firms too high and their unsuccessful counterparts too low.

Behaviorists tell us that we tend to overweight and overreact to the most recently received information. If we do, we will find that the information that we thought was so important becomes tempered, and reduced in significance, by new and related information that follows.

So you see, in the end, it is nearly certain that the power of prediction must triumph over the arrogance of elegance.

In real-world Finance, they don't pay for elegance. They pay for power - predictive power.

When you buy a lottery ticket, you don't know how tickets have been sold. But sold they have been. And there is an underlying distribution for the game.

A comprehensive list of factors brings predictive stability and predictive stability and predictive power.