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Take 1000 people, have each predict a coin flip 10 times. The top 10 players will have predicted way better than random chance would have you believe. Why sever
by Androider 11y ago
Take 1000 people, have each predict a coin flip 10 times. The top 10 players will have predicted way better than random chance would have you believe. Why several of them are even 10 for 10, they must have special prediction powers! ;)
Grow the player base, increase the number of predictions, you'll end up with some real super-stars who just go on winning. They'll probably write books and lecture about their techniques. Right up until the moment they lose. Kind of like hedge fund managers.
- coryl 11y agoEnough time and volume should eventually show whose truly good (statistically).
- deleted 11y ago[deleted]
- Joof 11y agoFlip 1000 pennies and calculate the results enough times and you'll get a gausian curve. Some results will consistantly flip heads the majority of the time. It's harder to model with VC's because they are measured in rewards that get exponentially better with success (money) and are self-reinforcing (better deals from recognition). My guess is that they figured out how to eliminate the absolutely horrible ones and got lucky enough times to have the best deals come to them.
- maaku 11y agoExplain Berkshire Hathaway for me then, please.
- refurb 11y agoBerkshire doesn't just buy stock. It buys a controlling interest and influences the way the company is run.
- mahyarm 11y agoVC investors tend to influence the company too.
- Cshelton 11y agoWhile true, the difference between the decisions the board of a company makes and the 'investors' is pretty significant. VC investors are not there to act as a board of directors. Where as many private equity/takeovers deals usually end up replacing many people on the board and executives.
- deleted 11y ago[deleted]
- scythe 11y agoExtremely unpopular fact: Berkshire has fundamentally the same business model as Bain Capital. They just do it better.
- maaku 11y agoI disagree, but let's say you are right. Then that model does outperform the market, no?
- ConfuciusSay 11y agoIt does, but how much of that comes down to lobbying. I wonder who was pressuring Obama to not approve Keystone, and who also happens to own a ton of railways that transport oil?
- rockinghigh 11y agoThey mostly make money with the private equity business by buying businesses with high cash flow and extracting more cash from them.
- maaku 11y agoThen why hasn't Coca Cola been sucked dry? That does not describe Berkshire Hathaway at all.
- gregpilling 11y agoI modeled this one day in Excel, using random numbers. In my case, the game was Russian Roulette and the group played it once a year for 20 years. I was very surprised that no matter how many times I refreshed the random results, a large percentage of 'players' were still playing after 20 rounds. I read this example in a book or article, but I can't remember what that was called.
- gabemart 11y agoI was curious about this so did some super quick modelling. With 1,000,000 people predicting 100 coinflips each, the top ten had an accuracy of: 75% (1) 74% (1) 73% (1) 72% (7)
- Maultasche 11y agoSome people can be incredibly lucky despite a lack of skill. Statistically, it's unlikely, but given a large enough sample size, someone will have extraordinary success purely by chance. The Romans considered luck to be an important trait. When regarding military leaders, they considered luck to be even more important than skill. It meant that the gods favored the lucky person. Julius Caesar was a skillful general, but he was even more admired for his incredible luck. There were many times where he was almost beaten, yet he got some lucky break that allowed him to be victorious.
- jodrellblank 11y agoBritish illusionist Derren Brown made a documentary about this, called "The System", where he wrote letters to people predicting the outcome of horse races using his secret system, and suggesting they place a bet. He sent different predictions to different people, some saw his predictions come true, and he sent more letters to all those people. And then repeated that, eventually narrowing it down to one person, who saw week after week correct gambling predictions, and really believed he had a system for winning. She borrowed family money to bet big - then he revealed that she was the result of survivor bias and he had no system. http://topdocumentaryfilms.com/derren-brown-the-system/ http://topdocumentaryfilms.com/derren-brown-the-system/