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this takes time to learn how to do well If it's possible at all. If you believe that markets are efficient, then it's not. Even if they're not efficient, it ma

by pfedor 18y ago

this takes time to learn how to do well If it's possible at all. If you believe that markets are efficient, then it's not. Even if they're not efficient, it may be impossible to exploit the inefficiencies because of the taxes and trading costs. Buying and holding an index of stocks historically outperforms an average actively managed fund, and past performance of a fund is not a predictor of future performance (so it doesn't help to buy funds that did well in the past.)

byrneseyeview 18y ago
You are not taking the efficiency argument far enough: if the market is efficient, it isn't a good use of time to do your research. But if it's not worth anyone's time to do research, the market will no longer be efficient. The market may be 'efficient' in the sense that people inclined to do research have a fair tradeoff between time spent researching and the benefits thereof. But it is incoherent for the markets to be perfectly efficient, in the sense that investors are able to rationally appraise the value of every single stock, but are fully incapable of appraising the value of their own time.
- eru 18y ago
  Perhaps your weaker version of efficiency suffices. If you are not on par with Buffett - buy index fonds.
- ph0rque 18y ago
  > But if [the market]'s not worth anyone's time to do research, the market will no longer be efficient. I wonder if we will get to the point that publically-traded companies will have to be perfectly transparent, and the needed research will be trivial (and automated)?
noodle 18y ago
i feel like it is possible, as i do know some people who've made it work. luck does play a significant factor in it. you earn your money based on the time you put into researching good investments. however, thats what they do. its their job. i'm not interested in doing that for a living, and i feel like most people would agree. i'd rather make money doing the stuff i enjoy and throw my investments into something i know will generate me extra revenue without having to worry about it.

by pfedor 18y ago

byrneseyeview 18y ago

You are not taking the efficiency argument far enough: if the market is efficient, it isn't a good use of time to do your research. But if it's not worth anyone's time to do research, the market will no longer be efficient. The market may be 'efficient' in the sense that people inclined to do research have a fair tradeoff between time spent researching and the benefits thereof. But it is incoherent for the markets to be perfectly efficient, in the sense that investors are able to rationally appraise the value of every single stock, but are fully incapable of appraising the value of their own time.

eru 18y ago
Perhaps your weaker version of efficiency suffices. If you are not on par with Buffett - buy index fonds.
ph0rque 18y ago
> But if [the market]'s not worth anyone's time to do research, the market will no longer be efficient. I wonder if we will get to the point that publically-traded companies will have to be perfectly transparent, and the needed research will be trivial (and automated)?

noodle 18y ago

i feel like it is possible, as i do know some people who've made it work. luck does play a significant factor in it. you earn your money based on the time you put into researching good investments. however, thats what they do. its their job. i'm not interested in doing that for a living, and i feel like most people would agree. i'd rather make money doing the stuff i enjoy and throw my investments into something i know will generate me extra revenue without having to worry about it.