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New Methods For Understanding "The Wisdom Of Crowds." Theory.

Use of future prices as a proxy for long term Call options as applied in my article, Amazon, Costco and The Wisdom of Crowds requires much time for understanding that most don't have available.

I have simplified the process to obtain Crowd opinion by proposing a survey of an investor group. This is an improved way to obtain results, but involves physical much effort to accomplish. The validity of its results don't have to be defended for they comprise exactly the data that we seek.

Direct polling of an investor group that include members who maintain honest, expert or inexpert opinion along with those who tell mistruths and deliberate falsehoods are acceptable. None of these departures matter since they average into the data set causing improper variations to cancel one another.

A more diverse group produces better results. One set of members will be excluded from the survey:

Those who do not have sufficient information about the subject or the ability to make a decision that contains a hint of understanding.

The theory suggested by The Wisdom of Crowds cannot be defended by its logical basis, reasonableness or theoretical foundation.

The theory's only basis for existence is its ability to produce a more accurate answer to a query than is the best individual answer from a group of experts.

Crowd theory's validity is defended by empiricism.

I will add some results from my investigations to my articles from time to time. I have decided to use my readers and SA followers as my test group.

If you wish to join them, contact me at SA Email, which may be accessed by clicking on your picture or icon that is placed on the SA tool bar then following directions.

The reward will that I will send you results for my survey long before they are published elsewhere.

Rules that I use in my investigation follow:

▪ A polled group must be composed of members who are conversant enough with the stated subject to understand the query.

▪ The polled group will contain exactly 100 members.

▪ The numerical average of results will be used as the basis for crafting opinion for future equity value.

▪ Only queries that can be evaluated without ambiguity will be used.

For example:

A question such as: "Will XYZ equity rise in price?" is not legitimate.

▪ This question leaves out information about what equity XYZ is rising above.

A question like: "How the DOW Industrial average will compare with the price of gold?" is not acceptable.

▪ The components of the DOW average are too complex for a polled user to separate their components.

Inquiries must be stated in simple form such as:

"How does the future price of 'ABC' equity compare to that of 'XYZ' equity?"


Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.