Gee, Think.

It was totally unexpected. I found myself in the basement of the Boston Museum of Science holding the first of 10 daily itineraries for a two week learning experience. I was about to instruct 24 high school sophomores in the virtues of collaboration. Collaboration, I found to be one of the most important skills. There was something about my graduate year of study that brought me to that conclusion, and I felt compelled to relay that message to this kids.

I can’t begin to describe the anxiety I felt in the days before the summer institute. I was responsible for 5 solo lesson plans and several others that I would teach in collaboration with my colleague Justin. I had very little experience teaching high school age students. I didn’t know what to expect. What would the kids think of the lessons we had in store? Would their attitudes be eager, interested, and enthusiastic? Would they be able to make their final presentations successfully? There were so many questions floating around in my head. I had a very hard time falling asleep on that first night in Boston.

We had done so much work to prepare for these 10 days. We worked with several dozen people to pull together all the details on everything from classroom furniture to wireless networks, guest speakers, planetarium shows, and scavenger hunts. We were charged with teaching these students the basics of the amorphous wireless grids, space science, information retrieval, museum exhibit design. These subjects were the substance. They were the goals, the concrete conclusions and hard facts. My goal was something different. I wanted not only to teach these students the concepts of these subjects. I wanted them to leave the museum changed. I wanted them to realize that they have the ability to focus, to learn, and most of all to collaborate to achieve their goals.

These 24 students were the dream team. They came from 3 separate school districts in Massachusetts and were hand picked to participate in the institute. Some students even wrote applications and were interviewed. They came into the museum as three distinct groups with long histories. Each group of students had gone to school together daily. Initially these groups were the defined student relationships, but by the end of the institute they had crossed those borders and founded lasting relationships. In fact some of these student still keep in touch to this day. I am still in touch with the feelings of inspiration I found while watching these students learn and collaborate in the positive environment we created.

What does it mean to be a good forecaster? In short, it means that you are right more than you are wrong. That’s the most relaxed and most basic qualification for being able to call yourself a forecaster.

A good forecaster is someone who’s right significantly more than they’re wrong. Being right 80% of the time is a good place to start. So let’s say I’m forecasting the weather for you each night. Each night I tell you whether the following day will be sunny, or cloudy. If I’m right on Monday, Tuesday, Wednesday, and Thursday but get it wrong on Friday I’d be performing with an 80% success rate. Would you employ me as a weather forecaster if I could keep up that kind of performance? I would hope so because 80% accuracy is pretty darn good when you’re essentially telling the future.

Now when I’m wrong, how do we measure how wrong I am? It’s pretty simple when you’re just predicting sunny or cloudy, heads or tails. Most forecasting situations are a little more complicated. Let’s add a little more detail to the previous example and say that instead of just telling you that tomorrow’s weather will be sunny or cloudy I also tell you the expected high temperature. So it’s Sunday night I and I tell you that Monday will be Sunny and the high temperature will be 66 degrees. Monday rolls around and it is Sunny but the high temperature is actually 70 degrees! Whoops! I got the sun forecast but missed the temperature by 4 degrees. I was 100% correct on my sunlight call but only 94% correct on my temperature call. That gives me a solid average of 97% for Monday. Not Bad!

Let’s consider another example. It’s Monday night and I tell you that Tuesday is going to be sunny again, and the high temperature will be 72 degrees. When all is said and done, Tuesday turned out to be a cloudy day and the high was only 51 degrees. Now I’ve really done it. My success in the sunlight call is 0% and I was off by 21 degrees, 30% error in my temperature call. When we average the success percentages of 0% for the sunlight call and 70% for the temperature call we get an overall success rate of 35% for Tuesday. That’s not too great, but every forecaster will have those days. Every forecaster will be wrong. It’s part of the job.

Now I’d like to consider financial forecasting in light of the examples above.

I’ve been trying to understand the stock market for about a year now. I’ve read a bunch of books, looked at a lot of charts, and dabbled in some methods of technical analysis. I’ve learned about reading charts for short term trading, and long term trading as well. On August 14th I signed up for a forecast service which will remain unnamed for this post. Since I started reading their forecasts, they were by and large wrong.

I expect forecasting services to be wrong sometimes, but when I am a customer of the service, I would like to understand what went into the decision making process that lead to an incorrect forecast. I want to know what happened, and why the forecaster thought the way that he did. This is not because I want to see him hung for making a mistake, but I see myself as his student, and I would like to learn how he does what he does by understanding his reasoning. It’s useful to know what reasoning has lead to success and what reasoning has lead to failure. You have to know both sides.

So after reading these forecasts for two months and watching the predictions fail time and time again I wrote a detailed email to the people that run the service.  I cited sentences, phrases, and numbers from their forecasts and calculated the percentage of error they had shown on several occassions. This was all meant to show that I was earnestly trying to understand their work.  I asked what sort of percentage of accuracy they were aiming for and what success rate I should expect as a subscriber.  I also asked what went wrong in their reasoning.

I was very disappointed to see that the only email I recieved was a vague and defensive response cited that they “aim for 100%” accuracy and “all forecasters are wrong sometimes.”  They dropped the ball on that one.  I was expecting better customer service than that.  As a forecaster, when you’re wrong whoops isn’t good enough.

How can I help you?
This is the continual question of my profession. I am a computer
scientist by training and a consultant by trade. My employer sells
complex software and service to go along with it. We provide
customization services to make each customer’s system unique as well.
We also provide live support to users of the system.
The software package is immense and has a steep learning curve. It is
my job to understand this software well and my ambition to understand
how it fits in to our customers’ business. I am learning more everyday
about what it takes to deliver a high performance software sysytem to a
customer.

Here’s another picture of the lunchtime crew on the benches at battery
park. It took anither picture like this last spring.

Last night my fiance and I met with a financial advisor. Wow. That’s a
sentence I never thought I would be writing in 2006, especially not if
you told me in 2003.
This was a really stimulating meeting. I’ve been reading all about
finances, money managment, assest allocation and saving for retirement
for a year now. Last night was an opportunity to talk with someone
whose profession is understanding these topics. It was a real treat. I
can honestly say that I had fun at the meeting as well. Our advisor was
young and energetic. We were able to joke around and in the next minute
we were discussing the tax and liquidity benefits of having retirement
funds allocated to varied account types.
This was just our first meeting, but the outlook is good. We hired him
on the spot. The cost was a couple hundred dollars which is not pocket
change for us, but will be well spent. The advice that he gave us last
night alone was probably worth the yearly fee. In addition, we get
quarterly consultations and a year’s worth of correspondence. I think
this is the start of a good thing.
I promise to write more about the particular company we are working with
after I’ve got some more good evidence. I don’t want to promote a
particular service until I am certain that it’s excellent.

Wow… I feel so much better after inhaling two slices of pizza and
what must have been two pints of nestea! Aaaaaaaah….. Waves of
relaxation!

“I have to get MY job done!”
This is how I was feeling tonight. This is my sense of passion, my
drive to complete the challenges ahead, and also my ego. My sense of
self worth is closely tied to my ability to work and earn a living. I
would like to say that I have seperated my work from my ego, but I have
to be honest with myself and the truth is that I try desperately to
achieve these goals in order to feel good.
Am I a work a holic?
I dion’t think so. I’ll be ready to call it a day as soon as the job is
done. The trouble comes when the job isn’t done in a day. This is
especially a problem when I have to continually tell people that the job
is not yet done. Every time I have to admit it, I cringe slightly. And
so to avoid this cringe, and to keep myself esteem I toil to meet the
deadlines and complete the work. I work even harder. I talk to my
neighbors less, I smile less, I laugh less. I focus more on the task at
hand rather than the people around me. I also become irritable.
Is this drive, this force of my ego a good thing or a bad thing? Is it
healthy? Will listening to this drive which emanates from my ego lead
me to happiness or frustration? I acknowledge that there will always be
both happiness and frustration in my life, but will this drive of my ego
increase my tendency toward stress and frustraton or happiness and
satisfaction?
Tonight I feel wound up and frustrated.

Today the Qs moved lower on high volume, but then around 12:30pm, shot
off like a rocket to prices above the open. That’s crazy. I know that
price gaps are likely to be filled, but this move was an intense up
shoot and it happened on stronger volume than usual for that time of
day. It was really wild to see.
I just looked at the advance decline ratio over the last year. It’s
easy to see that the ratio is much lower now than it was in May. Does
this mean that the ratio will have a hard time going lower? Or can it
stay low like this for a long time?

Do we have an ending traingle with a downside explosion building in the
Qs intraday chart today?