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Minyan Mailbag - Complexity Analysis: WFMI


Two sides to every story!


Note: Our goal in Minyanville is to remove intimidation from the financial markets and encourage an interactive dialogue among the Minyanship. We share this next column with that very intent.

Hi Scott,

I've got a question, well, rather a request, in regards to
your Whole Foods Market (WFMI) analysis that you recently posted on Minyanville. See, I also subscribe to Bernie Schaeffer's Option Newsletter and he is quite bullish on WFMI, in fact, it's a long pick of his in a recent newsletter. I've seen Bernie post a few times on Minyanville and was wondering if Scott and Bernie could give us Minyans some more commentary on their opposing views. I don't have any position in WFMI and now that I have 2 very different opinions from 2 individuals that I highly respect, well, it makes me go hmmmmm, maybe I need to do some more homework on this one before I put any money down.

I don't know if you guys can do this but I thought I'd ask. Thanks!

Minyan Tom


I trust Bernie's opinion very much but the irony (or perhaps dichotomy) of the markets and my complexity analysis is that two diverging opinions can exist at the same time.

My analysis is all about probability distributions: what are the weighted probabilities of a particular move during a particular time period? It is possible entirely that Bernie's analysis covers a different specific time period than mine. It is also possible that, of course, my probabilities are incorrect; if I believe, say, there is a 75-85% probability of a bearish move, there remains, of course, 15-25% probability that I am wrong. Perhaps even I am wrong in my assessment of those weighted probabilities.

My point is that Bernie's analysis and my own may not be mutually exclusive and even if they are, I suspect he would relay the same message to you as I: probability demands that there is a non-trivial chance one of us is wrong but that doesn't mean our methodology isn't correct.

Thanks for the kind words.


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