4 ms·

Can someone explain to me why people keep referring to average return as some sort of magical answer to the question? The median person makes the median income,

Can someone explain to me why people keep referring to average return as some sort of magical answer to the question? The median person makes the median income, that doesn't mean that trying to get a good job is pointless. By definition in order for you to make more than the market, someone else has to make less than the market. Assuming that knowledge has superlinear returns (I consider this to be obvious without proof required), of course less than 50% of participants will 'win' - those at the bottom are totally useless and burning money, whilst those at the top are quite skilled indeed. It's fair to say that one should not expect to be in that upper echelon, but I don't think it's reasonable to state 'most people lose' and just leave it at that, it's blindingly obvious that most people lose, it would be impossible for them to not. (Adjusted for balances - a guy with 20 billion quid can lose 1 pound each to 7 billion market participants and in that case 'almost everyone wins more than the market')

leetcrew 6y ago
a lot is stacked against you as a private investor. being very smart is not enough to beat the market consistently when your competition is other very smart people who themselves have a support staff of very smart people and they all spend 8+ hours a day analyzing the market and making trades. even if you quit your day job to trade full-time, they can collect information in ways that you can't (eg, satellite imagery), and they may also have direct lines to an exchange to execute trades faster than you. unlike you, they trade in large enough volume that they can get people to pick up the phone to trade after the exchange closes. they have access to entire classes of investments that are closed to you due to capital requirements.
- heavenlyblue 6y ago
  Hm. I would argue that working for an institution that gives you access to satellite imagery also implies you can’t really play below a certain threshold of volume. Otherwise it’s like hunting deer with a ballistic missile: you will kill the deer, but for that money you could have raised a whole tribe of them.

leetcrew 6y ago

a lot is stacked against you as a private investor. being very smart is not enough to beat the market consistently when your competition is other very smart people who themselves have a support staff of very smart people and they all spend 8+ hours a day analyzing the market and making trades. even if you quit your day job to trade full-time, they can collect information in ways that you can't (eg, satellite imagery), and they may also have direct lines to an exchange to execute trades faster than you. unlike you, they trade in large enough volume that they can get people to pick up the phone to trade after the exchange closes. they have access to entire classes of investments that are closed to you due to capital requirements.

heavenlyblue 6y ago
Hm. I would argue that working for an institution that gives you access to satellite imagery also implies you can’t really play below a certain threshold of volume. Otherwise it’s like hunting deer with a ballistic missile: you will kill the deer, but for that money you could have raised a whole tribe of them.