'Tips' Puzzle solution

Hello All,

It has been a long time since i updated the blog.That has been so because of a lot of factors but i am not going to dwell into them now. Today i plan to write the solution for the puzzle i had put forward earlier.

So lets get started !! The whole puzzle had been put forward from the perspective of the person who was receiving the mail. Now let us turn our attention to the person who was sending the mails. Lets call this person A and suppose that he somehow procures a huge list of contact details of potential customers with their email ids. Not a very tough task i suppose considering the number of firms selling such lists in today's market. Now Mr A is very clever as we will show soon and has a firm grasp on a simple concept of 'slice and dice'. He smartly divides this huge list of people into three groups X1, X2 and X3 on a random basis.To each of these groups he sends a "tip" in the following order.

X1 -> The price of stock will go up.
X2 -> The price of stock will go down.
X3 -> The price of stock will stay as it is.


Now if u observe carefully then you will see that the three predictions cover the entire universe of solutions of what could happen with the stock prices. One of them has to come true no matter what!!!

So after one month our Mr A sits back on his arm chair and picks up the group for whom the prediction had come true and again sub-divides that group in three. The other two groups are discarded and the same process is repeated with another stock tip. This goes on for a few months. Each time two third of the people to whom the tip was sent were discarded and the remaining one third for whom the tip had come true were sent the next round of mails.Thus in say 6 months time he had a set of people for whom six consecutive predictions had come true. These guys had by now truly started believing in what Mr A was claiming. What a way to manipulate human psychology !!!

Now people for whom all these predictions had come true won't mind coughing up the fees he demands for any future 'tips'. Thus he has his loyal base of customers!!
Now i do feel bad for the fellow who suffered huge losses on count of this, but then its no point getting GOD in middle of this. All that has happened is he has been tricked and fooled completely and he does not even realized that even after the whole episode. Moral of the story be critical with the information that you have. Today we have more noise and less information. Always try to understand the underlying dynamics. Most important, only because there is a strong correlation between two things does not always mean that one is the cause and the other is the effect.

Thus my suggestion be aware the next time you get a mail!!!

Puzzled!!!

I have a very interesting puzzle for you today.The most salient feature about this puzzle is the simplicity of it.You might be tempted to say that there is no serious or practical answer to it.But i warn you that it is not the case and you will definitely scratch your head once you figure out the answer in complete amazement.So here we go ...

Say one day you get a mail from some self proclaimed finance pundit extolling
his powers of predictions about the mad mad stock market.He gives a "tip" saying that a particular stock A will go up by say 10% in a month's time. You dismiss him as one more analyst,finance guru or nerd who have an opinion on all the matters of finance without having an ounce of knowledge.So a swift shift delete and the mail vanishes from your inbox.Now a month has passed and over a mug of beer a friend of yours tells you how he made 10% by buying stock A following the advice given in an email.A bulb glows somewhere at the back of your head.You wait for this unknown oracle to speak again.Soon another email registers itself in your inbox.It highlights its previous prediction and gives one more tip for this month.Though excited your skeptical self prevails and you dismiss the whole episode as a chance coincidence.Another month passes by and you again hear from this stranger. He emphasizes the corectness of his last two predictions and gives you one more tip for this month.You sure are amazed.A quick search and you verify the results of the last prediction.So you hear yourself saying "Well maybe this fellow really knows something.Lets check him out." You eagerly track the latest stock and soon see his prediction coming true.Voila!!. You have discovered a goldmine dude.You swear to yourself "I am not going to miss out on the next tip.Lets make some money."
Sure as if you are having a telepathy with this oracle and one more mail makes its way to your inbox.Another tip and you are all geared up.Like a smart investor you put a small amount of money on the stock this fellow has recommended and after a month find to your satisfaction that you it was bang on target.God is really happy with you son.But then all of us have heard "There are no free lunches."Are they??.So the next mail summarily says its time to put some serious money on the table to subscribe to his "tips".Afterall you would have made a small fortune by following his tips.So you agre and write him a cheque and wait for the next tip.There it comes.Already your eyes are green with greed.You have hit a jackpot.You are dreaming of that latest cell phone that you saw your boss carrying.You promise your girlfriend a diamond necklace soon.This is your chance,so you go full throttle on this one.Put all your money on this bet.Maybe borrow some from your friends and put it on this stock.
Now neither am i a sadist nor a hindi film script writer,but your good days have come to an end.This tip turns out to be wrong.Ahh,heart broken you feel like banging your head as well as of that fellow who lead you to this misfortune.In a contemplative mood you look up at the sky and ask GOD with disdain "Why me?".You try to reason with yourself, "I had tested this fellow.It was not that i followed his tips blindly.I waited for months and saw the results before i put any serious money." So what went wrong? Yes, that is the puzzle."What went wrong and how?"

Now you might say this was plain luck,maybe chance coincidence.But i warn you against these thoughts.There is a very logical pattern behind this whole scenario.Whack your heads,go get yourself a cup of coffee.Maybe you should light your favourite smoke before you wrestle with this puzzle.Do whaatever that needs to be done to get those creative juices flowing for there is a very logical answer.A simple yet such a powerful model that it fooled you so easily.

Well i will leave you with that.Will post the answer in a few days.Till then good luck to all of you.Keep posting your answers...