Are You a Bayesian Investor?

Bayesian investor.jpg
Before you answer that, lets understand the Philosophy of Bayesian Inference with this simple example.

You are a skilled programmer, but bugs still slip into your code. After a particularly difficult implementation of an algorithm, you decide to test your code on a trivial example. It passes. You test the code on a harder problem. It passes once again. And it passes the next, even more difficult, test too! You are starting to believe that there may be no bugs in this code…

If you think this way, then congratulations, you already are a Bayesian practitioner! Bayesian inference is simply updating your beliefs after considering new evidence. A Bayesian can rarely be certain about a result, but he or she can be very confident.

Via CamDavidsonPilon

Wells that’s it. If you invest based on evidence and use qualitative assessments rather than emotional speculation, you are a Bayesian Investor.

I, for one, am trying to follow this path, though not there yet!! Don’t use statistic and curves much but I do have a few quantitative metrics than I run through before digging deeper!!!

More on Bayesian_inference on Wikipedia

2 thoughts on “Are You a Bayesian Investor?

  1. Nice blog Sukha!
    now that I think about it; almost everyone I know seems to be a Bayesian investor. It would be interesting to see if we could apply this thinking process while taking the decisions in life.


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