2 ms·
> That's if you have one trade per year. How would you model this if you have 25 monkeys throwing, say, 300 darts at the board per day, for every day that the m
by zeteo 9y ago
> That's if you have one trade per year. How would you model this if you have 25 monkeys throwing, say, 300 darts at the board per day, for every day that the market is open (252 days), for five years?
If the data is reported on a yearly basis then it's pretty much the same thing.
- dsacco 9y agoNo it isn't, because each firm doesn't have a 50% chance of beating the market each year. Unless you're postulating that that is the case, it's not at all the same. I can quibble about the odds of each individual trade resulting in profit or less being binary, but for the sake of argument it'll do. But a 50% chance of beating the market each year isn't supported by anything. The grouping of data reporting doesn't suggest anything about the underlying data if it doesn't also share the same probability distribution. The trades are the events which determine if a fund will outperform on an annual basis, and we can group those trades by day, week, month, year, etc.
- zeteo 9y agoStrategy A: buy one random stock per year. Strategy B: buy two random stocks. If the expected payoffs were mathematically different then you'd have an arbitrage opportunity. Then apply induction.