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Not all stock markets have the "consistent" growth the US has. I put the word in quotes because that exact notion of the past predicting the future it's what's
by everdev 9y ago
Not all stock markets have the "consistent" growth the US has. I put the word in quotes because that exact notion of the past predicting the future it's what's inherently wrong with many of these companies.
It's super easy to create a model that could beat the market when run against historical data. It's a whole other thing to beat the market in real time.
Evidence of this would be that's it's possible to leverage stock positions by multiple factors. If anyone can accurately predict the future and profit from it, then it's easy to turn $5k into $5M with enough leverage and compounding profits. The problem is no one can do it consistently at that level of accuracy.
- darawk 9y agoHow many people are going to respond to me with this comment? There's firms that beat the market. See: Two Sigma, Renaissance, etc.
- Erlangolem 9y agoIf enough people flip enough coins, there will be outliers. It’s not proof of the ability to manipulate the falling coin, it’s just how probabilities work. Take the same group and keep them flipping coins, and that becomes clear, but in this case the rewards of luck are persistent, in the form of investment.
- darawk 9y agoMany quant firms beat the market with a consistency that puts their p-values well below the threshold that would be required to make this claim, even given the multiple comparisons problem you bring up.
- CPLX 9y agoOf course there are. They do it by figuring out how to get material non-public information. That's been the scam for as long as there has been a stock market, the rest is noise.