4 ms·
Yeah but why do those who survive survive?
by bigdict 5y ago
Yeah but why do those who survive survive?
- femiagbabiaka 5y agoMostly luck.
- ytNumbers 5y agoTo quote Mazarin, "One must not ask of a general, 'Is he skillful?', but rather, 'Is he lucky?'". I think what Mazarin was probably getting at was that the best generals will always have others claiming that their success was due to luck.
- andrewflnr 5y agoLuck, usually.
- ttul 5y agoMostly it’s random chance. The reality of investing is that it’s mostly down to chance. Take an equally skilled set of investors and give them the same market access and some will do exceptionally well.
- bidirectional 5y agoThis does not stand up to scrutiny at all, for any kind of investing. There have not been so many VC/hedge/PE funds in history that the top ones would arise through chance.
- SanFranManDan 5y agoI mean you can get ten thousand monkeys throwing darts at a board full of companies as an investment strategy, and a handful of those monkeys will be top performers with excellent returns.
- prepend 5y agoHow many vc/hedge/pe funds were there? How many funds around today were here 20 years ago. Failures don’t typically advertise and it’s quite likely there ARE/WERE thousands or millions of small firms managing a few million each.
- croes 5y agoYou know that old scammer trick? Pick 512 wealthy people, pick a stock, write half of the the people the stock will rise, the other half the stock will fall. Wait for the real development, dump the addresses of the losers, pick a new stock and start again. Write one half stock will rise, other half, stock will fall. Repeat until only one address is left. Now give him the opportunity of an large investment. You have shown your skills because you were right 10 times in a row.
- bidirectional 5y agoAnd how does this apply to modern investment funds who have to regularly provide client reports and make disclosures?
- sangnoir 5y agoTake 512 investment funds, in one year half of them make a profit, half of them will make losses. Drop the ones that had losses, the next year half will make profits, the other half will suffer losses. Repeat until one fund is left: "Invest in us - we are market experts who had no losses for the past 9 consecutive years!"
- bidirectional 5y agoWell yes, I understand that. The point is that your model predicts the current landscape of funds as being about as likely as pigs flying.
- croes 5y agoBecause people don't know the performance of dart throwing monkeys https://www.forbes.com/sites/rickferri/2012/12/20/any-monkey-can-beat-the-market/ https://www.forbes.com/sites/rickferri/2012/12/20/any-monkey...
- bidirectional 5y agoThat article explains that the outperformance was due to a broader economic trend of small cap companies outperforming weighted indices. They effectively baked in a known-to-win strategy from the start and then ran it in various slightly-randomised ways (and they're fully open about it!)
- croes 5y agoSimple answer, it's impossible that all people choose the wrong investment even if you just choose by chance. It like playing the lottery, why do some people win? Because not all can lose all the time. And as soon you reach a certain wealth level it's easier to keep that level than to reach it in the first place, unless you are in idiot.
- passivate 5y agoHow many times can one person win the lottery? The large firms seem to successfully bet on winners quite a bit.
- richardwhiuk 5y ago_Somebody_ wins it every week.
- passivate 5y agoPeople lose money in lottery tickets, casinos, equity investments, etc all the time. If a VC is successful over a period of time with a history of investing in winners, then there is something more than simply randomness.
- richardwhiuk 5y agoWith enough VC firms, and enough small bets, that's not guaranteed to be true.