Thanks for playing ... and for providing the background to what...

Thanks for playing ... and for providing the background to what is a simply an illusion.

So how is "color" determined? A computer can detect "color" ... its just a number. The computer would simply sample a pixel from both squares and compare ... and it will conclude that both squares are IN FACT the same color. As hard as that is to believe, you could "snip" the picture and cut out "A" and "B" and paste into say PPT and you will see it is true (that's what I did)

@davycrockett ... its obvious isn't it ... "A" appears darker ... so you suspect correctly
@cara ... it's in the shadow so "B" must be darker ('cos anything in shadow is darker) even though it looks lighter
@monad ... it's a trap ... don't trust the test ... "darker" is relative and the shadow changes the original color (brilliant)
@boydie63 .... trust what you see ... shadow doesn't matter

This test is known as Adelson's same color illusion
https://www.brainhq.com/brain-resources/brain-teasers/adelsons-same-color-illusion/

So what's the point???

1. Go back to what I said at the start ... a computer would have concluded the squares are the same color by comparing the digital pixels (just 1s and 0s). The computer makes it's decision based on quantitative analysis.

2. Fundamental (and technical) analysis relies upon quantitative analysis first. Is "color" (proxy for "qualitative") used at all? Well yes up to a point. In the posts were I went over what I thought was a reasonable explanation for Intrinsic Value (not price) the key qualitative input among a sea of quantitative inputs based on probability distributions was the "Required Rate of Return" that was "risk adjusted" .... and I used 24% because I "felt" OEL risk was high, and that gives a different value than if I used 18% for a less risky investment. That alone creates a "value band" based on RRoR which incorporates a numerical value for risk. Technical chart analysis is something I leave to our resident chartists such as EC & akap. I don't think I'm overstepping the bounds but I'd sum it up as they are looking for patterns (and computers do that very well too).

3. Sentiment on the other hand tends to subjective. It too can be at times derived as a number (1 = Satisfied, 0=Unsatisfied, thumbs up or thumbs down, smiley face or sad face) or variations thereof. I've heard the term "sentimentals" used where the measurement of "sentiment" is attempted (like parsing social media sites using Natural Language Processing), especially after "announcements".


I go back to the picture I used when discussing Intrinsic Value (which btw is not my definition). This probably a long term chart as IV doesn't change frequently (you would not calculate it daily IMO ... maybe Qtrly) .... only material changes in RRoR or Net Income (such as what we've witnessed with Covid) bounce it around.

The delta between the IV and MP is the "speculative value"



That "speculative value" to me is represented by the "color illusion" and "sentiment" might be a proxy for that ...
.... maybe "A"= OEL and "B"= BYE ... the same but different (sentiment). I dare say that some of the "sentiment" built into the stock price (for both) is non-company specific (e.g. sector sentiment, commodity price risk,....) and some sentiment is very company specific. One only has to read the Annual Reports of both companies.

How to a handle on sentiment in the same way we do for financials ... the bots & AI spend lots of time & money to get it.