"An expert is someone who knows some of the worst mistakes that can be made in his subject, and how to avoid them."
"An expert is someone who knows some of the worst mistakes that can be made in his subject, and how to avoid them."
In classical physics an object can completely described by it’s momentum and position, both of which can be measured exactly. In other words, classical physics is completely deterministic.
In quantum physics, Heisenberg uncertainty principle asserts a limit to the precision with which position and momentum of a particle, can be known simultaneously. Quantum physics, unlike classical physics, is completely non-deterministic where only a probabilistic assessment can be made for these linked measurements. Furthermore, Heisenberg’s uncertainty principle showed that an act of measurement influences the system being measured.
Heisenberg’s Uncertainty Principle has parallels in finance. Predicting financial markets is inherently probabilistic. Yet market forecasts typically represent mode of the distribution i.e. highest likelihood outcome as opposed to a probability weighted expected value. Furthermore, policy makers’ and market participants’ forecasts of the economy and markets influence their actions thereby influencing the distribution of potential economic and market outcomes.
Heisenberg Macro adopts a probabilistic approach to analyzing markets and investment decisions. It is based on the core belief that understanding the probability distribution of outcomes and the interplay between policymaker and market participants forecasts’ and the probability distribution of outcomes is key to identifying asymmetric risk-reward investing opportunities.
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