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Chance doesn't explain it. Firstly, in the 90s I doubt there were 65,536 hedge funds around, so simple chance would not dictate one to return above average ever

by Tycho 14y ago

Chance doesn't explain it. Firstly, in the 90s I doubt there were 65,536 hedge funds around, so simple chance would not dictate one to return above average every year. Secondly, we're not talking about just a 50/50 outperform/underperform situation - the Medallion Fund spectacularly outperformed the market in many of those years and never reported losses. In years when the market crashed they were eg. 90% up. So it's not just the unlikelihood of consistently outperforming year after year, it's also the unlikelihood of outperforming at such a magnitude in any given year, that you need to consider.

lutusp 14y ago
> Chance doesn't explain it. About a program I wrote, that generates random numbers, and that therefore can only model chance? Yes, chance does explain it -- it is the only possible explanation for a spectacular performance in a program that simply rolls random dice. > Firstly, in the 90s I doubt there were 65,536 hedge funds around ... I'm waiting to hear your argument. The number of funds doesn't change the outcome, and the number you chose has no bearing on the problem. > so simple chance would not dictate one to return above average every year. Are you aware that we're discussing a computer program that proves that spectacular returns can be gotten using random numbers? Which part of this aren't you understanding? > the Medallion Fund spectacularly outperformed the market in many of those years and never reported losses. False. http://www.hedgefundletters.com/category/renaissance-technologies/ http://www.hedgefundletters.com/category/renaissance-technol... Quote: "Between January 1993 and April 2005, RenTech’s flagship Medallion fund had only 17 losses out of 148 months." Check your facts, Mr. Scientist. Also irrelevant. If your position had merit, science would be a matter of choosing the most extreme, unrepresentative outlier and calling that the average. But that's not science, that's superstition. Guess how many funds are above average on a given day? 10%? 20%? Would you believe 50%? The third answer is the right one -- as you would know if you understood statistics. In science, Occam's razor prefers the simple explanation. The simple explanation is chance. The same chance outcome that means ... wait for it ... fully 50% of funds are above average.
- Tycho 14y ago
  Medallion never had a down year, which is what I was referring to, although they have had some monthly losses. The odds on a fund having Medallion's returns in a strong-EMH environment are astronomical - so either it is a cosmic fluke or the EMH is incorrect. Occam's Razor suggests the latter. (also I was never talking about your computer program)

by Tycho 14y ago

lutusp 14y ago

> Chance doesn't explain it. About a program I wrote, that generates random numbers, and that therefore can only model chance? Yes, chance does explain it -- it is the only possible explanation for a spectacular performance in a program that simply rolls random dice. > Firstly, in the 90s I doubt there were 65,536 hedge funds around ... I'm waiting to hear your argument. The number of funds doesn't change the outcome, and the number you chose has no bearing on the problem. > so simple chance would not dictate one to return above average every year. Are you aware that we're discussing a computer program that proves that spectacular returns can be gotten using random numbers? Which part of this aren't you understanding? > the Medallion Fund spectacularly outperformed the market in many of those years and never reported losses. False. http://www.hedgefundletters.com/category/renaissance-technologies/ http://www.hedgefundletters.com/category/renaissance-technol... Quote: "Between January 1993 and April 2005, RenTech’s flagship Medallion fund had only 17 losses out of 148 months." Check your facts, Mr. Scientist. Also irrelevant. If your position had merit, science would be a matter of choosing the most extreme, unrepresentative outlier and calling that the average. But that's not science, that's superstition. Guess how many funds are above average on a given day? 10%? 20%? Would you believe 50%? The third answer is the right one -- as you would know if you understood statistics. In science, Occam's razor prefers the simple explanation. The simple explanation is chance. The same chance outcome that means ... wait for it ... fully 50% of funds are above average.

Tycho 14y ago
Medallion never had a down year, which is what I was referring to, although they have had some monthly losses. The odds on a fund having Medallion's returns in a strong-EMH environment are astronomical - so either it is a cosmic fluke or the EMH is incorrect. Occam's Razor suggests the latter. (also I was never talking about your computer program)