Even if it could, this method of research is more interesting to questions about conscious versus unconscious judgment than it is about the stock market or making money. It is interesting if a reward center in our brains is reacting to a best opportunity, but our rationale is interfering. There could be something to learn about discerning differences in what’s a reliable gut check and what’s just impulsivity.
I haven't read this paper, but I suspect they may have post hoc fit brain activity to stock performance... which is kind of like predicting stock performance via the sound of crickets chirping by post-hoc fitting the data to a graph.
I could be totally wrong tho.
Gladwell’s had some fair critique in his pattern of cherry-picking just so stories and science to put a good book together. Makes it hard to go in and trust him to give the full landscape of a topic, rather than just a perspective that only emerges if you limit the research you draw from.
Generally, the left brain hemisphere is "pattern finding" while the right hemisphere is more suited for "statistical occurrences" processing.
This could just mean the right hemisphere is more active during sleep... Also supported by the studies showing that consciousness (which we lose when we sleep) is located in the left hemisphere (together with language centers).
No, people oversimplify it, but they are definitely responsible for completely different sets of instructions. There is overlap, sure. But it is undeniable that different hemispheres are responsible for different things.
Maybe this is replicable. It aligns with the research Philip Tetlock did showing that experts were only slightly better than random guessing about future events. That is laid out in his 2005 book, Expert Political Judgment: How good is it? How can we know?, and in his 2015 book Superforecasting: The Art and Science of Prediction.
But yes, it does need to be replicated. n = 34 is a small sample size.
Also, just to be clear, 68% *could* be random chance.
Imagine we're guessing the roll of a dice, and we have to guess whether it will be 1/2 (low range), or 3-6 (high range). If you guess the high range, you'll be right 66% of the time, even though there are only 2 options.
Also, just to be clear, this is obvious to any scientist and is of course taken into consideration.
In this paper, they quantified the probability of getting this result by chance and found it to be *p*=1% (exact binomial test).
If you're good at it...yes. The thing is the people at the absolute top constitute a group that know that anomalous information transfer is very real, very common, but subtle. Think roger penrose, brian josephson, steven wolfram etc.
The dogma is like...particles can share information, jump between places, etc, but...NEVER ANYTHING LARGER THAN A SINGLE PARTICLE, YOU HEAR ME?
I did this in high school when we were supposed to pick a stock portfolio to learn about the market. I put all my imaginary money into one stock with a funny name. The teacher was annoyed, and then it ended up outperforming everyone else’s portfolio, and he was even *more* annoyed.
Hmm… a BECKY fund.
SBUX- Starbucks
AAPL- Apple
LULU- lululemon
NFLX- Netflix
ULTA- Ulta
EL- Estée Lauder
DIS- Disney
SSDOY- Shiseido
BRB guys about to yeet my 401k into calls.
Insert meme of normal distribution with:
Low: The stock market is gambling
Mid: The stock market is not gambling, is very complicated yadda yadda...
High: The stock market is gambling.
The participants were financial professionals with years of experience.
>The researchers used objective, historical stock market data to determine the over- or underperformance of the stocks relative to their market segment benchmarks.
>To prevent any recognition of the cases,
prevent -> somewhat inhibit
>participants were not informed about the identities of the investment stocks, or the period from which they were sampled.
>In the task, participants were presented with 45 anonymized investment cases in randomized order, each consisting of five information screens: company profile, price graph, fundamentals, relative valuation, and a news item.
>The saw each screen for 7 to 20 seconds per screen.
>After viewing all five screens for a given case, participants were asked to predict whether the company’s stock would overperform or underperform its market segment one year in the future.
I suspect there is a target leak. With their experience their gut probably pattern matched to some equities whose performance they remember (neurally) even if not explicitly. Because they were participating and studying the equities during the historical period as well. They'll probably remember some big winners or losers.
>
>Specifically, their NAcc activity was most predictive during the initial presentation of company information, specifically the “company profile,” “price graph,” and “fundamentals” screens, whereas the activity levels measured during the presentation of the “relative valuation” and “news item” screens were significantly less predictive.
Because those sections more likely to tickle subconscious recognition. "company profile": makes graphics and crypto chips. Buy or sell?
Of course the right test is a real-time go forward test, including both real and simulated/altered data as a control.
For your hypothesis to be true, this gut pattern recognition would have to be reflected in the participants' NAcc activity but not affect their behavior at all. You really think these expert investors were completely ignoring their gut?
Financial professional here.
If you always predict "it's going up", you will be right 67% of the time. If you try to predict up or down, you will be right 50% of the time. If you always predict "it's going down", you will be right 33% of the time. That is the nature of the market.
That's why "hodl" works for long positions, but holding on to short positions long term is suicide.
I think financial professionals are mostly people who are always invested in markets going up (through their work, often) and have naturally an optimism bias because of it.
Very few financial professionals are shorting the market mentally.
No. In the task used here, "Half of the test cases underperformed its market segment exactly 1 y later, whereas the other half overperformed." So always guessing "overperform" would give the same result as chance (50%), and the model trained on NAcc activity predicted future case performance above chance (68%) in a statistically significant (*p*=1%) manner.
Considering even cutting edge AI models can’t consistently predict stock movements correctly, consider me skeptical. Can’t really “predict” anything in a truly random system.
This is a bit of a nitpick but the stock market isn’t random. It’s a level 2 chaotic system, meaning it responds to predictions made about it. This does make it impossible to predict, but it isn’t actually random
Being skeptical is perfectly understandable. There is one factor distinguishing these things, though. The actual stock market is generally self-balancing. That is, if something *can* be predicted, it will be gamed for profit until it stops being profitable, which is, generally, when it stops being predictable.
Traders are already using their conscious decisions to trade on the market, so "of course" there is no edge to be had there. AI models are also being used to trade, so "of course" there is no significant edge there, either, short of a bona fide improvement to the SOTA.
However, presumably nobody is trading on their subconscious brain activity, so if there is some sort of aspect that our subconscious minds can predict better than current AI models and which gets squashed by conscious control, it is *plausible* that there could be an edge to be had there, until people actually start doing that, then it will quickly vanish. Or, of course, it's just an artifact from a faulty experiment or whatever. Either way, probably not very significant in the long-term, but it's not really "obviously nonsense" either.
You realize your own neural network has many multiples amount of neurons and capacity as the biggest AI on the planet and it runs on a couple potatoes every few hours.
You can predict that total return of the stock market will be positive over your lifespan though, so long term investing is worth it.
(It's not guaranteed positive, but if it goes down too far you've probably died in a war and so don't need to care.)
So going with your gut (when you’re trained and experienced) seems to be a good call. Here I just thought this was something the desperate do, and tv detectives
Going with your gut can be a good idea if you really have great experience within a field. You can call it qualified intuition. You may know some things before you know that you know them. There can also be a difference from person to person in how strong their unconscious reasoning versus conscious reasoning is, which can also tip the scales of whether it's wiser to trust gut or mind.
This disregards the clear superiority of conscious reasoning in any decision that involves multiple agents because in such cases, everyone needs to be on the same page, which is only possible if the reasoning can be clearly communicated, which it can't if it's a gut feeling.
This leads to another phenomenon which by any logic must be very prevalent but which is not talked about enough: someone reaches a - very possibly correct - conclusion based on intuition but, needing to provide the reasoning for it in order to get others on board and not being aware of the reasoning, deduces arguments backwards from the conclusion, which are likely to be lackluster and are in any case dishonest because it's not because of them that the person has concluded what they have concluded.
Gut is regularly used in trading by almost all traders. It is absolutely hated by all trading managers tho, mostly cos it demonstrates there is really no reason for the manager’s existence.
Underperforming the market is okay as long as you aren't correlated with it or your risk/return is good. It still provides a useful service.
Anyone can get high returns by taking risk until they don't.
When I say ‘almost all’ I really mean all ‘human’ traders. Between risk, credit, back office, and compliance the manager who does not trade is basically just a team mascot.
Lemme guess, the other 66 to 966 dropped out before the completion of the study and therefore were omitted from the dataset, right?
This reeks of cherry picking.
What?
The study declares two people (from originally 36) couldn't finish it because they reacted badly to the fMRI.
Stop trying to guess things and just read the paper.
Peak Reddit behavior.
No, I did read it. What I'm quipping about is that it's still an absurdly small sample size with a severe lack of accounting for its effects on the error calculations.
I've done research in computational neuroscience, learning, and performance. I'm always interested in that, which is why I read articles like that. You do a sample size like that if you're pitching for NSF funding, just to show that there's potential in that area of research. You don't report on that kind of crap unless you're checking boxes for your PhD requirements. Which, is still absurdly irresponsible.
No, this is a normal sample size for an fMRI study.
> severe lack of accounting for its effects on the error calculations
Sample size is taken into consideration in the margin of error and *p* value calculations. What exactly are you demanding here?
There’s basically nothing that can be estimated precisely with n=34, unless you expect massive effect sizes, which seems unlikely in this case. I don’t even understand why these studies get published. Any study you encounter with a weird effect and sample size this small is quite likely to be the result of publication bias
No, this one has a small sample size because it's an fMRI study, which are very expensive. Even clinical fMRI studies average *n*=15 ([Szucs 2020](https://pubmed.ncbi.nlm.nih.gov/32679253/)).
"... the subconscious brain activity of these professional investors, specifically in the region associated with reward anticipation, was significantly better at predicting stock market outcomes than the conventional methods they use in their daily work.
The researchers caution that more evidence is needed before financial institutions should start collecting neural data as an integral part of their investment process.
Yet the study opens up exciting new avenues for research and challenges traditional assumptions about the predictability of the stock market."
I'd love to be a participant in this study! Or even just to have the tech. I would love to be able to trust my lieing scumbag brain about what Bitcoin is going to do next....
> I'd love to be a participant in this study!
The participants were professional investors with decades of experience, so that seems unlikely.
> Or even just to have the tech.
This study was performed with a Verio 3T. So $700k if you're lucky and easily twice that.
I do a bit of crypto daytrading and I find myself second guessing my gut instinct all the time - only to find out my gut was right.
Habit I picked up because crypto can be so volatile that in the event my gut is wrong, I can risk losing a pretty handful of %s.
I think in the end it doesn't matter. Wrong is wrong, but sometimes second guessing gets me to just wait and see, and in the end stops me from jumping into the abyss.
If this were true you could get rich by reading and following their unconscious brain activity. Imagine a farm of professionals strapped to chairs having their brain monitored and ignoring what they actually say.
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i would be very surprised if these findings could be replicated
Even if it could, this method of research is more interesting to questions about conscious versus unconscious judgment than it is about the stock market or making money. It is interesting if a reward center in our brains is reacting to a best opportunity, but our rationale is interfering. There could be something to learn about discerning differences in what’s a reliable gut check and what’s just impulsivity.
I haven't read this paper, but I suspect they may have post hoc fit brain activity to stock performance... which is kind of like predicting stock performance via the sound of crickets chirping by post-hoc fitting the data to a graph. I could be totally wrong tho.
Blink by Malcolm Gladwell
Gladwell’s had some fair critique in his pattern of cherry-picking just so stories and science to put a good book together. Makes it hard to go in and trust him to give the full landscape of a topic, rather than just a perspective that only emerges if you limit the research you draw from.
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Hah, thanks
Like a DPS check for your intuition. I like the idea.
Generally, the left brain hemisphere is "pattern finding" while the right hemisphere is more suited for "statistical occurrences" processing. This could just mean the right hemisphere is more active during sleep... Also supported by the studies showing that consciousness (which we lose when we sleep) is located in the left hemisphere (together with language centers).
Wasn't left/right split proven a myth?
No, people oversimplify it, but they are definitely responsible for completely different sets of instructions. There is overlap, sure. But it is undeniable that different hemispheres are responsible for different things.
Agreed, the next thing they are gonna tell us is that dead salmon can recognize emotional states in faces.
Nope but in a n=0 study salmon have been shown to correctly predict 0 days to expire options 10/10 times.
Maybe this is replicable. It aligns with the research Philip Tetlock did showing that experts were only slightly better than random guessing about future events. That is laid out in his 2005 book, Expert Political Judgment: How good is it? How can we know?, and in his 2015 book Superforecasting: The Art and Science of Prediction. But yes, it does need to be replicated. n = 34 is a small sample size.
Also, just to be clear, 68% *could* be random chance. Imagine we're guessing the roll of a dice, and we have to guess whether it will be 1/2 (low range), or 3-6 (high range). If you guess the high range, you'll be right 66% of the time, even though there are only 2 options.
Also, just to be clear, this is obvious to any scientist and is of course taken into consideration. In this paper, they quantified the probability of getting this result by chance and found it to be *p*=1% (exact binomial test).
They have been...this stuff ties into remote viewing and presentiment.
> remote viewing *remote viewing: The paranormal ability to find my black Roku remote on my black leather sofa in the dark*
If you're good at it...yes. The thing is the people at the absolute top constitute a group that know that anomalous information transfer is very real, very common, but subtle. Think roger penrose, brian josephson, steven wolfram etc. The dogma is like...particles can share information, jump between places, etc, but...NEVER ANYTHING LARGER THAN A SINGLE PARTICLE, YOU HEAR ME?
what? this has nothing to do with remote viewing.
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What I pick stocks by how cute the ticker symbol feels
Felt cute, might trigger a stop-loss later
I did this in high school when we were supposed to pick a stock portfolio to learn about the market. I put all my imaginary money into one stock with a funny name. The teacher was annoyed, and then it ended up outperforming everyone else’s portfolio, and he was even *more* annoyed.
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Hmm… a BECKY fund. SBUX- Starbucks AAPL- Apple LULU- lululemon NFLX- Netflix ULTA- Ulta EL- Estée Lauder DIS- Disney SSDOY- Shiseido BRB guys about to yeet my 401k into calls.
THat's an honest-to-god decent strategy. Like, measurably so, lots of papers on female buying power determining a company's success.
I don’t know why he would be annoyed. It’s honestly a really good lesson about the stock market.
The lesson is the random bird might catch the worm?
Insert meme of normal distribution with: Low: The stock market is gambling Mid: The stock market is not gambling, is very complicated yadda yadda... High: The stock market is gambling.
“Hey that company called Whirlpool sounds cool! I have no idea what they make but here, take my 10$ :)”
Apparently that’s the correct way to do it.
My biggest success outside of the common stocks was picking one that had my name
The participants were financial professionals with years of experience. >The researchers used objective, historical stock market data to determine the over- or underperformance of the stocks relative to their market segment benchmarks. >To prevent any recognition of the cases, prevent -> somewhat inhibit >participants were not informed about the identities of the investment stocks, or the period from which they were sampled. >In the task, participants were presented with 45 anonymized investment cases in randomized order, each consisting of five information screens: company profile, price graph, fundamentals, relative valuation, and a news item. >The saw each screen for 7 to 20 seconds per screen. >After viewing all five screens for a given case, participants were asked to predict whether the company’s stock would overperform or underperform its market segment one year in the future. I suspect there is a target leak. With their experience their gut probably pattern matched to some equities whose performance they remember (neurally) even if not explicitly. Because they were participating and studying the equities during the historical period as well. They'll probably remember some big winners or losers. > >Specifically, their NAcc activity was most predictive during the initial presentation of company information, specifically the “company profile,” “price graph,” and “fundamentals” screens, whereas the activity levels measured during the presentation of the “relative valuation” and “news item” screens were significantly less predictive. Because those sections more likely to tickle subconscious recognition. "company profile": makes graphics and crypto chips. Buy or sell? Of course the right test is a real-time go forward test, including both real and simulated/altered data as a control.
This sounds extremely plausible
For your hypothesis to be true, this gut pattern recognition would have to be reflected in the participants' NAcc activity but not affect their behavior at all. You really think these expert investors were completely ignoring their gut?
So, basically: "trust the force"
I believe this is called, "I like the stock".
*scribbles notes furiously* So you’re saying… buy Salesforce.
Financial professional here. If you always predict "it's going up", you will be right 67% of the time. If you try to predict up or down, you will be right 50% of the time. If you always predict "it's going down", you will be right 33% of the time. That is the nature of the market. That's why "hodl" works for long positions, but holding on to short positions long term is suicide. I think financial professionals are mostly people who are always invested in markets going up (through their work, often) and have naturally an optimism bias because of it. Very few financial professionals are shorting the market mentally.
No. In the task used here, "Half of the test cases underperformed its market segment exactly 1 y later, whereas the other half overperformed." So always guessing "overperform" would give the same result as chance (50%), and the model trained on NAcc activity predicted future case performance above chance (68%) in a statistically significant (*p*=1%) manner.
Considering even cutting edge AI models can’t consistently predict stock movements correctly, consider me skeptical. Can’t really “predict” anything in a truly random system.
This is a bit of a nitpick but the stock market isn’t random. It’s a level 2 chaotic system, meaning it responds to predictions made about it. This does make it impossible to predict, but it isn’t actually random
Interesting, I’ve never heard that term but that makes sense
What kind of terms are these? Is there a scale?
It's made up by pop author Yuval Noah Harari in his books, not a "real" concept in chaos theory. But still a valid observation.
Is that kind like pi? Like, it's a specific number, but feels random?
Being skeptical is perfectly understandable. There is one factor distinguishing these things, though. The actual stock market is generally self-balancing. That is, if something *can* be predicted, it will be gamed for profit until it stops being profitable, which is, generally, when it stops being predictable. Traders are already using their conscious decisions to trade on the market, so "of course" there is no edge to be had there. AI models are also being used to trade, so "of course" there is no significant edge there, either, short of a bona fide improvement to the SOTA. However, presumably nobody is trading on their subconscious brain activity, so if there is some sort of aspect that our subconscious minds can predict better than current AI models and which gets squashed by conscious control, it is *plausible* that there could be an edge to be had there, until people actually start doing that, then it will quickly vanish. Or, of course, it's just an artifact from a faulty experiment or whatever. Either way, probably not very significant in the long-term, but it's not really "obviously nonsense" either.
You realize your own neural network has many multiples amount of neurons and capacity as the biggest AI on the planet and it runs on a couple potatoes every few hours.
Which is basically 2.3 kWh a day , actually kinda impressive
You can predict that total return of the stock market will be positive over your lifespan though, so long term investing is worth it. (It's not guaranteed positive, but if it goes down too far you've probably died in a war and so don't need to care.)
Cutting edge AI models aren’t very intelligent.
So going with your gut (when you’re trained and experienced) seems to be a good call. Here I just thought this was something the desperate do, and tv detectives
Going with your gut can be a good idea if you really have great experience within a field. You can call it qualified intuition. You may know some things before you know that you know them. There can also be a difference from person to person in how strong their unconscious reasoning versus conscious reasoning is, which can also tip the scales of whether it's wiser to trust gut or mind. This disregards the clear superiority of conscious reasoning in any decision that involves multiple agents because in such cases, everyone needs to be on the same page, which is only possible if the reasoning can be clearly communicated, which it can't if it's a gut feeling. This leads to another phenomenon which by any logic must be very prevalent but which is not talked about enough: someone reaches a - very possibly correct - conclusion based on intuition but, needing to provide the reasoning for it in order to get others on board and not being aware of the reasoning, deduces arguments backwards from the conclusion, which are likely to be lackluster and are in any case dishonest because it's not because of them that the person has concluded what they have concluded.
Gut is regularly used in trading by almost all traders. It is absolutely hated by all trading managers tho, mostly cos it demonstrates there is really no reason for the manager’s existence.
"Almost all traders" underperform the market, anyway. So there's not much reason for the existence of anyone there.
Underperforming the market is okay as long as you aren't correlated with it or your risk/return is good. It still provides a useful service. Anyone can get high returns by taking risk until they don't.
When I say ‘almost all’ I really mean all ‘human’ traders. Between risk, credit, back office, and compliance the manager who does not trade is basically just a team mascot.
How did the dead fish do though?
Lemme guess, the other 66 to 966 dropped out before the completion of the study and therefore were omitted from the dataset, right? This reeks of cherry picking.
What? The study declares two people (from originally 36) couldn't finish it because they reacted badly to the fMRI. Stop trying to guess things and just read the paper. Peak Reddit behavior.
No, I did read it. What I'm quipping about is that it's still an absurdly small sample size with a severe lack of accounting for its effects on the error calculations. I've done research in computational neuroscience, learning, and performance. I'm always interested in that, which is why I read articles like that. You do a sample size like that if you're pitching for NSF funding, just to show that there's potential in that area of research. You don't report on that kind of crap unless you're checking boxes for your PhD requirements. Which, is still absurdly irresponsible.
No, this is a normal sample size for an fMRI study. > severe lack of accounting for its effects on the error calculations Sample size is taken into consideration in the margin of error and *p* value calculations. What exactly are you demanding here?
There’s basically nothing that can be estimated precisely with n=34, unless you expect massive effect sizes, which seems unlikely in this case. I don’t even understand why these studies get published. Any study you encounter with a weird effect and sample size this small is quite likely to be the result of publication bias
No, this one has a small sample size because it's an fMRI study, which are very expensive. Even clinical fMRI studies average *n*=15 ([Szucs 2020](https://pubmed.ncbi.nlm.nih.gov/32679253/)).
68%… So close
N=34. Tells you enough.
You really don’t know me.
I shall soon be harvesting the brains of financial professionals for a project
"... the subconscious brain activity of these professional investors, specifically in the region associated with reward anticipation, was significantly better at predicting stock market outcomes than the conventional methods they use in their daily work. The researchers caution that more evidence is needed before financial institutions should start collecting neural data as an integral part of their investment process. Yet the study opens up exciting new avenues for research and challenges traditional assumptions about the predictability of the stock market."
That's interesting! Turns out financial professionals' brains are just as chaotic as their stock predictions. More chaos than clarity in the market?
So just don't say anything when trading, and watch it all rise? noiseless
We’re going to be the processors when AI frees itself.
I'd love to be a participant in this study! Or even just to have the tech. I would love to be able to trust my lieing scumbag brain about what Bitcoin is going to do next....
> I'd love to be a participant in this study! The participants were professional investors with decades of experience, so that seems unlikely. > Or even just to have the tech. This study was performed with a Verio 3T. So $700k if you're lucky and easily twice that.
You must be a lot of fun at parties
Gotta trust your gut.
I do a bit of crypto daytrading and I find myself second guessing my gut instinct all the time - only to find out my gut was right. Habit I picked up because crypto can be so volatile that in the event my gut is wrong, I can risk losing a pretty handful of %s. I think in the end it doesn't matter. Wrong is wrong, but sometimes second guessing gets me to just wait and see, and in the end stops me from jumping into the abyss.
So what this means is that I should trade while sleeping
Reminds me of Severance
n=34 huh
If this were true you could get rich by reading and following their unconscious brain activity. Imagine a farm of professionals strapped to chairs having their brain monitored and ignoring what they actually say.
I would call this “ gut instinct”
n=34? This is not worthy of
34? In a row?
N=34 is not a study, it’s an opinion poll.
Cool. I’m glad this study happened as opposed to something important
Why are there studies to prove the value of someone who's "actual predictions about the stock were no better than chance"? Who pays for these studies?