A reader sends me this excerpt from Thomas Leonard’s “Bayesian Boy” book or diary or whatever it is:“While Professor Mayo’s ongoing campaign against LP would appear to be wild and footloose, she has certainly shaken up the Bayesian Establishment.” Maybe the “footloose” part refers to the above image (first posted here.) I actually didn’t think the Bayesian Establishment had taken notice. (My paper on the strong likelihood principle (SLP) is here). *This falls under “rejected posts” since it has no direct PhilStat content. But the links do.
PhilStock. I haven’t had time for stock research in the past 6 months, but fortunately, no changes to portfolios have been required. With Yellen’s assurances last week that the monthly methadone injections of $85 billion[i] of will continue, it’s bull, bull, bull, with new highs weekly. Even my airlines—generally the worst area to trade in—are, yes flying high (e.g., American from $1.90 to over $11., Delta, Jet Blue, all soaring). But look how low our Diamond Offshore mascot (DO) is [ii]. It is said that small investors typically jump into the market only after the bull has been running:
“The likely outcome is they’ll ride that last-gasp bull market for a short while and experience an enormous loss in personal wealth when the bubble collapses.”(link)
I’m guessing the next 4 months might be safe (T, VZ, WIN?): Remember, though, the one rule on PhilStock: Never ever listen to (i.e., act on) anything I say about the stock market.
[i]in monthly bond market purchases.
[ii] There’s an explanation (of course). It hardly matters with over 5% in special dividends. For why DO is the “mascot” of my regular blog, search rejected posts.
Some related posts:
Bad News is Good News on Wallstreet
Four different people now have sent me a letter circulating on an ISBA e-mail list (by statistician Thomas Leonard) presumably because it mentions the (strong) likelihood principle (SLP). Even in exile, those ISBA e-mails reach me, maybe through some Elba-NSA retrieval or simply past connections. I had already written a note to Professor Leonard* about my new paper on the controversial Birnbaum argument. I’m not sure what to make of the letter (I know nothing about Leonard): I surmise it pertains to a recent interview of Dennis Lindley (of which I watched just the beginning). Anyway, the letter and follow-ups may be found at their website: http://bayesian.org/forums/news/5374.
Dear fellow Bayesians,
Peter Wakker is to be complimented on his deep understanding of the De Finetti and Lindley-Savage Axiom systems. Nevertheless
(1) The Likelihood Principle doesn’t need to be justified by any axiom systems at all. As so elegantly proved by Alan Birnbaum (JASA,1962) , it is an immediate consequence of the Sufficiency Principle, when applied to a mixed experiment, and the Conditionality Principle. The frequency arguments used to prove the Neyman-Fisher factorization theorem substantiiate this wonderful result
(2) The strong additivity assumptions in the appropriately extended De Finetti axiom system are, I think, virtually tautologous wih finite additivity of the prior measure..So why not just assume the latter, and forget the axioms altogether? The axioms are just window dressing, a sprinkling of holy water from Avignon, Rome or wherever..
(3) The Sure Thing Principle is an extremely strong assumption, since it helps to imply the Expected Utility Hypothesis, which has been long since refuted by the economists. See for example Maurice Allais’ famous 1953 paradox and the other paradoxes described in Ch.4 of my book Bayesian Methods (with John Hsu, C.U.P.,1999) where one of many reasonable extensions to the Expected Utility hypthesis is proposed..
When Dennis brought me up to be a Bayesian Boy, he emphasised the following normative philosophies::
If you want to be coherent you have to be a (proper) Bayesian
If you’re not a Bayesian, then you’re incoherent. and a sure loser to boot
Therefore all frequentists are criiminals
(After 1973) So are Bayesiabs who use improper priors
Sorry, Dennis, but I still don’t believe a word pf it
(Note that the counterexamples to improper priors described by Stone, Dawid and Zidek, 1973, relate to quite contrived, anomalous situations,. While some sampling models can only be analysed using proper priors, a judicious choice of improper prior distribution will produce a sensible posterior when analysing most standard parametrised models)
Re: Interview with Dennis Lindley
Without wishing to generate any spam, could I possibly add that Michael Evans (University of Toronto) has advised me that Birnbaum’s 1962 justification of the LP is mathematical unsound, It should be more correctly stated as
Theorem: If we accept SP and accept CP, and we accept all the equivalences generated jointly by these principles, then we must accept LP
Michael also proves:
Theorem: If we accept CP and we accept all equivalences generated by CP then we must accept LP
Therefore all the counterexamples to LP published by Deborah Mayo (Virginia Tech) are presumably correct. Moreover the extra conditions may be very difficult to satisfy in practice. History has been made!
Gee whiz, Dennis! Where does that put the mathematical foundations of Bayesian statistics now? Both De Finetti and Birnbaum have misled us with their mathematically unsound proofs. I think that either you or Adrian should break cover and respond to this. And how about the highly misleading empirical claims in your 1972 paper on M-Group regression which I’ve long since refuted (e.g. Sun, Hsu, Guttman, and Leonard (1996), and the inaugural ISBA meeting in San Francisco in 1993)? I call upon you and Adrian to finally formally retract them in JRSSB..
And now back to my poetry—-
With best wishes to Bayesians and frequentists everywhere,
Writer, Poet, and Statistician
Topsy turvy again! It was widely predicted that today was the day most likely for Bernanke to announce long-awaited plans to begin “tapering” the $85 billion of monthly bond buying stimulus [i]. But, no. Apparently the economy is more worrisome than Ben expected when he all but declared tapering would be announced at the September meeting. Tapering is delayed, forecasts are lowered; stock market climbs to new highs. Things are so bad (in the economy), they’re good (on Wall St.) Does this make sense?*
[i] “See, “The Great Taper-Caper”.
*Of course, I understand all-too-well why this is happening, but it’s still topsy turvy and rather insane…
“In the last month alone, the words ‘federal reserve’ and some form of the word ‘taper’ appeared in 1,923 news articles in the Nexis database (the number was 12 in the same period last year)” (link is here).
“The taper caper,” as all stock market sleuths know, is the mystery of whether/when Ben Bernanke will taper off the rate of bond buying, down from the current $85 billion a month. (See my last rejected post.) Investors, traders, and especially trading robots who run the market, are on hair trigger alert for clues from Bernanke today. “And the word on everyone’s lips on Wall Street all morning will be ‘taper‘”. With hints Ben will be departing in 2014, the drama is raised a notch, but the band of (mostly) day traders here at this NYC meet-up are playing it cool…. Tune in later.*
**3:15pm Oh-oh…things are good enough to start t-a-a-pering soon, but not right away…oh like it’s a big surprise…topsy turvey coming…buy bonds?
3:20: Mayo departs for furniture shopping at the NY Design Center…***
***5pm: Mayo checks market: Oy, (major plummet!) see what I mean (about topsy turvey)? Glad I bought those tapered bookcases (in ebony macasa). At least they offer something concrete!
Now tomorrow, it will be said the robots overreacted…
What a topsy-turvy game playing the stock market has become. In the past (don’t ask me how far) signs of a strengthening economy would point to the likelihood of stocks rising, now it is the reverse. (At least at current, in the short term). As soon as reports are out showing even marginal improvement, the fear that Bernanke will begin to taper the huge monthly bond purchases leads the stock market to plummet (like yesterday). Every time he whispers, let alone speaks, about easing out of the “easing” at some future point, the market drops precipitously. It’s almost as if traders don’t want the economy to start recovering too much, lest Ben stop the feeding. With interest rates low, companies borrow to buy back their own shares, keeping their prices afloat. I’m sure there are other theories, and I’m not any kind of expert—just an outsider, playing from the sidelines. The other strange twist is that the game nowadays has much less to do with predicting the economy or human psychology, than with figuring out the “psychology” of the high speed computers that run the markets. What words would be frequently out there in the news today to trigger the programs to buy/sell (at 2p.m., say)? The high-frequency traders have a huge advantage (but don’t get me started on that).
 “The 3 reasons why stocks have skyrocketed”
 What are a couple of telecoms low this week, you ask? I will answer only if you remember the PhilStock rule: never, ever act on anything I say on PhilStock.
[A solid, high dividend a few points down: A,T&T (T): $35:47 (pays 5%); S&P 5 star (semi-speculative)unusually low this week: windstream (WIN) $7.89 (pays over 12 %).
Able no one nil red nudist opening nine pots. I’d underline “No” on Elba.
STATEMENT: “Thanks for the book. It was easy to win with just one word. I was never able to get the palindromes before. I underline ‘no’ to the question of who I am.”
CHOICE OF PRIZES: “Error and Inference. Staley’s review sold me”.
Error and Inference: Recent Exchanges on Experimental Reasoning, Reliability and the Objectivity and Rationality of Science (D. G. Mayo and A. Spanos, CUP 2010/11).
The requirement was to include Elba plus “opening”—yes the contest has become easier. June will also have just one word: contest (plus Elba).
For some reason, science debunker Goldacre’s blogpost below makes me take him slightly less seriously. It’s as if he’s saying, it’s no shame in giving psychic pronouncments to parents with missing children–people who obviously might be devastated or misled as a result–so long as you’re not found wrong. Does anyone else see it this way?
May 7th, 2013 by Ben Goldacre in just a blog
The story of Amanda Berry’s rescue in Cleveland – after ten years in captivity - is extraordinary. In 2004, popular psychic Sylvia Brown told Amanda’s mother that her little girl was dead. Here is a contemporaneous account of that show.Amanda Berry’s mother traveled to New York to tell her story to Psychic Sylvia Browne on the Montel Williams Show. The show was a shot at getting her daughter’s picture before the eyes of millions of Americans. “On April 21st 2003, 16-year-old Amanda Berry left her part-time job never to be seen again,” the show began. With that, TV viewers across America now know a girl from Cleveland is missing. But Amanda Berry’s mom wanted more than her daughter’s picture on national TV. She wants answers. “Can you tell me…Is she out there?” Berry’s mother Louwana Miller asked. “I hate when they’re in the water,” Browne said. “She’s not alive honey.” It was bad news from the world-renowned psychic. It’s what Miller didn’t want to hear. “So you don’t think I’ll ever see her again,” Miller said. “Yeah in Heaven on the other side,” Browne responded. “I’m sorry.” Montel took a commercial break and Amanda’s mom broke down.It has been widely reported in the last 24 hours that Amanda Berry’s mother died in 2006 of a broken heart: certainly she must have endured appalling anguish over her last years. It would be nice if people like Sylvia Browne could deliver their stage entertainment with a bit more consideration. Until hell freezes over, we can at least draw attention to these horrible episodes.
Does it really make sense to cut air-traffic control? Weren’t there already too few wide-awake folks in the towers? Here I am delayed at LGA, NY, but I will say that Delta is impressively laying out free cold drinks and snacks. I just don’t see how airlines can function with so much unpredictable regulatory control. Have you noticed airline fares have gone through the roof in the last year? Strangely, I hear no one talking about it, but I’m pretty sure it has a lot to do with airlines being required (by a newly imposed law) to give people 24 hours to change a ticket without penalty–in case they make a mistake– and the huge new TSA taxes, which, incidentally, airlines are required to combine with the base price so you cannot even see how much it is. I’ve also noticed that prices are essentially identical across airlines and travel websites (so far as I can tell), whereas there used to be a lot of variability. Nor is it just that I trade in airlines—in fact airline stocks are at close to their near term highs. Not that the companies themselves are profitable; they’re not. It’s only that they were so low last year (e.g., DAL from ~$7-$17, search philstock in this blog, if interested). My kvetch is that the U.S.depends on people being able to fly, and yet there’s much more intervention in the “private” airline business than other industries, so far as I’m aware. Well I guess we’ll be seeing those blades and machetes soon (with the new ruling, search my regular blog).
On board the captain apologizes for the lateness, makes it clear it was not their fault but actually required by the FAA, and that we should all write to our representatives in Congress!
Explaining my April 1, 2013 blog:
I was alone in my beautiful office at Thebes (where I live)*. I really didn’t have the time to spend on a jokey April 1 post, but given this blog has only been in existence a year and one-half, I felt I should try for some kind of “tradition” on April fool’s day, especially in case I had a great idea next year. Last year http://errorstatistics.com/2012/04/01/3102/ had many fooled, so lest I let people down, I tried to think of a wild joke that related to our topics, and came across “The Sin of Bad Science” –“bad science” being a frequent theme around here. But the more I read the Tilberg Report to which it led, and passages from Stapel’s book, the less my idea seemed wild after all, but rather, all-too-believable. I had no time to come up with something else, and decided to design the post with a productive end: to get people to read section 5 of the Report.
The IG is imaginary, but not so far-fetched (given the interviews in the Report). Thus, the April Fool’s joke is partly on me! Finding the European Association letter (a link to which was only added after Kent Staley’s comment on the post) nearly does derail at least part of (what I thought was) my wild and zany idea.
If people do not see how this state of affairs is promoted by the trends in philosophy of science and statistical practice over the last 15 years or so, they should think again. For examples, scan the blog:
For an index to Jan-Feb: http://errorstatistics.com/2013/03/10/blog-contents-2013-jan-feb/.
*Spoof on Diederik’s memoir.