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March 16, 2007

Strange But True!

Q. How in just a few short weeks might you convince someone you're a stock forecasting savant, even when you're not? Don't really try this!

A. Take a list of 1,024 investors and send them a letter on Monday, outline Edward Burger and Michael Starbird in “The Heart of Mathematics.” To 512 of them you write, “IBM stock will go up next week”; to the other 512 you say, “IBM stock will go down next week.” The following week, you send 512 letters to the group for whom you predicted correctly, and to 256 you write, “IBM stock will go up next week,” and so on. At the end of that week, 256 people are starting to pay attention to your forecasting savvy. Then it's on to 128 letters, 64, 32, 16, 8, 4, 2. “After nine weeks, two people will have seen you predict the future nine times in a row.” Now you ask them to send a large check requesting your next week's prediction, followed by an “up” letter to one, “down” to the other. Later, to assuage your conscience, you return the check to the person you misled.


 
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