PhilStockPage: (Feb 25)

1. Not Phil’s Stock World. It seems that someone has confused my PhilStock musings with a real (for-profit) stock-market site run by a guy named Phil. Phil’s Stock World, at http://www.philstockworld.com, calls itself  “high finance for real people,” which may distinguish it from being for the computerized  robots that conduct roughly 70 percent of all trading. These days the robots are reading their own reports, generating further “structured” data that are folded into “narratives” tailored to the target audience of the moment.

What I’d like to know is whether programmers endow computerized traders with the same superstitions as their human counterparts. [i]  When you consider that stock-trading “experts” are not accountable for predictions that don’t pan out, it is easy to see why superstitions are common among traders.  (Even a rare trader, such as myself, would need to take them into consideration simply because of the psychology of others.) You only need to follow what the 5-to-8 key market reports say about the same stock on the same day to see that they’re all over the map. Anyway, listen to Phil if you wish, but don’t forget my standard caveat for PhilStock: Never take any stock advice from me.[i]

2. Diamond Offshore (DO). DO, the stock metaphorically tied to this blog’s deep-drilling excursions into statistical foundations—and reported at $60 in my December 20, 2011 post—is now up to around $67!

3. Excitement in biotech after-hours: Qnexa. This just in on the biotech front after the close on Wednesday (not that I’m in New York to follow stocks): With an extremely surprisingFDA advisory committee’s recommendation that the FDA approve the obesity drug Qnexa on Wednesday (it was shot down a few years ago), the stock promptly doubled (after hours) from $10 to $20. (Trading had been halted all day.) FDA has to make a separate decision in April, but they often follow the panel recommendation.

The main interest, from the perspective of this blog, however, is that I was able to watch live video of the advisory panel’s afternoon deliberations. Adam Feurstein, a generally irksome biotech stock reporter, was doing a pretty good job of live blogging the event, when a link to the panel came up.

Given that FDA panel deliberations are ostensibly open to the public (perhaps upon request), I’d been wondering for years why there wasn’t a way to get news of the results as it happened, rather than after the fact. Now it seems we can (assuming this is general.) Observing these panels in action is an excellent way to learn how statistical reports of the various stakeholders enter in at this stage of evidence-based drug policymaking. In the portion I watched of the Qnexa deliberations, statistical significance played a huge role, as always, but not in any of the unthinking ways many writers on statistical foundations love to lampoon. Several reports seemed to sound the death knell for Qnexa all over again, pointing especially to statistically significant risks such as increased heart rate and teratogenicity, but there was no denying the statistically significant weight losses (of ~10 percent of body weight). Yes, tests were used to extract the extent of the increases that are and are not warranted, in the manner of a severity-type scrutiny (some call them effect sizes, but not all are identical to what is warranted with high severity). Ultimately, many such pieces of information, along with the risks of obesity, went into what is, after all, a policy determination (in contrast to scientific inferences about causal effects alone). : whether or not to recommend FDA approval.

[i] As it happens, Phil gives a description of one superstition that, while all too common, I’ve never seen specifically named: “The Maiden Sacrifice to the Volcano – In times of market turmoil or in the midst of a heavy sell-off, many portfolio managers and investors believe that they have to blow out one position to appease the market gods, tossing a maiden into the volcano so that the island will be spared the wrath.”  http://www.philstockworld.com/2009/11/12/eight-trading-superstitions/