4 ms·

I'm wondering, as I read this over and over again about random picks performing as well or even better than professionals in the field, how come we never see ri

I'm wondering, as I read this over and over again about random picks performing as well or even better than professionals in the field, how come we never see rigorous scientifc studies about this for various timescales? If we could really attribute this task to randomness wouldn't this save a lof of money to financial institutions considering how much the same people earn for these tasks?

orangepurple 4y ago
It's more profitable to sell hope
PaulDavisThe1st 4y ago
This is what "whole market funds" or "S&P 500 funds" are all about. No stock picking, other than identifying some pre-existing known set of stocks, and just investing in them without discrimination or effort. They have become quite popular over the last 15 years as the "random walk down wall st" idea has spread within (US) culture.
- WalterSear 4y ago
  I have read, and heard from multiple financial professionals, that these work best in low interest rate bull markets, and are more likely to underperform active management strategies in more turbulent and difficult financial environments, such as the one we are entering.
  - zamnos 4y ago
    The phase you're looking for is tax loss harvesting. A good money manager on a good fund will be able to take advantage of that in a down market, leading you to greater riches when there's a bull market. You can do it yourself, but you can also pay a professional to do that work for you, hence the fees on a given fund.
cosmojg 4y ago
People are willing to pay a premium for good marketing and an air of superiority.
chx 4y ago
> I'm wondering, as I read this over and over again about random picks performing as well or even better than professionals in the field, how come we never see rigorous scientifc studies about this for various timescales? Erm, Kahnemann got a Nobel price in economy for his work with Amos Tversky over a decade which this was a part of. I am not sure what you need here, do you need a list of papers by Kahnemann and Tversky? With Terry Odean thrown in for good measure? I am not sure who the "we" are here who do not see these papers but they do exist.

orangepurple 4y ago

It's more profitable to sell hope

PaulDavisThe1st 4y ago

This is what "whole market funds" or "S&P 500 funds" are all about. No stock picking, other than identifying some pre-existing known set of stocks, and just investing in them without discrimination or effort. They have become quite popular over the last 15 years as the "random walk down wall st" idea has spread within (US) culture.

WalterSear 4y ago
I have read, and heard from multiple financial professionals, that these work best in low interest rate bull markets, and are more likely to underperform active management strategies in more turbulent and difficult financial environments, such as the one we are entering.
- zamnos 4y ago
  The phase you're looking for is tax loss harvesting. A good money manager on a good fund will be able to take advantage of that in a down market, leading you to greater riches when there's a bull market. You can do it yourself, but you can also pay a professional to do that work for you, hence the fees on a given fund.

cosmojg 4y ago

People are willing to pay a premium for good marketing and an air of superiority.

chx 4y ago

> I'm wondering, as I read this over and over again about random picks performing as well or even better than professionals in the field, how come we never see rigorous scientifc studies about this for various timescales? Erm, Kahnemann got a Nobel price in economy for his work with Amos Tversky over a decade which this was a part of. I am not sure what you need here, do you need a list of papers by Kahnemann and Tversky? With Terry Odean thrown in for good measure? I am not sure who the "we" are here who do not see these papers but they do exist.