- #1
FallenApple
- 566
- 61
Because of the statistical nature of autocorrelation, we know that time events that are closer together are more correlated to each other than to time events that are further apart. Which makes sense because differing perturbations of complex chaotic systems can, and do, have wildly differing trajectories.
So in that sense, does it make sense to invest most of ones portfolio in highly liquid assets so as to take advantage of short term correlation between time events rather than to bet on the long haul, of which should be less correlated to current knowledge of the system?
Liquid assets essentially allow one to act quickly in response to evolving market systems since it should have more power to utilize data from closely connected time distances and hence more correlation to draw reliable inference from. This allows one to possesses a very useful ability: quick liquidation of the vast majority of one's assets if better investment vehicles or opportunities arises. And this can be done repeatedly over the long run to replace one liquid asset after another depending on what the market favors to be highly liquid in any given time slice.
I'm assuming that because of the inherent strength of short term correlation between time events, one can just iteratively update their strategy based on currently obtained knowledge, which is somewhat akin to bayesian reasoning, but fast acting under the assumption that time correlation is much greater between time data slices that are close rather than those that are far.
So in that sense, does it make sense to invest most of ones portfolio in highly liquid assets so as to take advantage of short term correlation between time events rather than to bet on the long haul, of which should be less correlated to current knowledge of the system?
Liquid assets essentially allow one to act quickly in response to evolving market systems since it should have more power to utilize data from closely connected time distances and hence more correlation to draw reliable inference from. This allows one to possesses a very useful ability: quick liquidation of the vast majority of one's assets if better investment vehicles or opportunities arises. And this can be done repeatedly over the long run to replace one liquid asset after another depending on what the market favors to be highly liquid in any given time slice.
I'm assuming that because of the inherent strength of short term correlation between time events, one can just iteratively update their strategy based on currently obtained knowledge, which is somewhat akin to bayesian reasoning, but fast acting under the assumption that time correlation is much greater between time data slices that are close rather than those that are far.
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