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I can't believe you aren't getting this. There are no secrets of the winners. > Real world example: http://www.cnbc.com/id/100809395 http://www.cnbc.com/id/100

by lutusp 13y ago

I can't believe you aren't getting this. There are no secrets of the winners. > Real world example: http://www.cnbc.com/id/100809395 http://www.cnbc.com/id/100809395 That's an announcement effect, not a method for beating the market. It exploits people's stupidity, not their intelligence. For a classic announcement effect, there are an equal number of winners and losers, and the average return is zero. In this specific example, some people get to buy the stocks in advance of the public announcement, then the public investors stupidly and dutifully buy stocks whose price has already peaked and is about to fall. It transfers money from uneducated investors to educated ones. If the uneducated investors realized what was being done to them, they would not invest and the system would collapse. http://www.investopedia.com/terms/a/announcment-effect.asp http://www.investopedia.com/terms/a/announcment-effect.asp A typical announcement effect scam are online penny stock touters, who: 1. Buy a worthless stock. 2. Tout the stock online: "I just heard from my cousin that this stock is about to move!" 3. Wait for some idiots to invest in the stock. 4. Sell. > It could also be the case that some people have a comparative advantage. Maybe they have certain skills that enable them to win were other people cannot. Maybe Occam's razor says that it's all chance.

bhickey 13y ago
You're on the money in both this post and the grandparent. However, I'd urge you to examine your style. There's no need to condescend. In particular: > I just proved it. If you didn't understand the above proof, read it again. > I can't believe you aren't getting this. Plenty of otherwise rationally minded people have a hard time reasoning about this stuff. If I had a dollar for every time someone suggested that you can beat the house by playing a Martingale... gosh! You'll have a much easier time persuading people if you don't insult them.
- lutusp 13y ago
  I agree with your point, but in the 21st century, I have a hard time accepting that many people ignore basic scientific principles -- in particular, the null hypothesis, which in essence says that a given proposition is assumed to be false until there's evidence for it. > Plenty of otherwise rationally minded people have a hard time reasoning about this stuff. Rationality is what rationality does. There's a devious investment scam that, once explained, seems obvious, but most people fall for it unless forewarned. I call it the "Miracle Man" scam. Here it is: http://arachnoid.com/equities_myths/index.html#Miracle_Man http://arachnoid.com/equities_myths/index.html#Miracle_Man I would like to live in a world where a scam like "Miracle Man" couldn't work, because people would say "It seems too good to be true, therefore chances are it's not true." But that's not this world, not by any means.
im3w1l 13y ago
>It transfers money from uneducated investors to educated ones And this is exactly what you "proved" could not happen

by lutusp 13y ago

bhickey 13y ago

You're on the money in both this post and the grandparent. However, I'd urge you to examine your style. There's no need to condescend. In particular: > I just proved it. If you didn't understand the above proof, read it again. > I can't believe you aren't getting this. Plenty of otherwise rationally minded people have a hard time reasoning about this stuff. If I had a dollar for every time someone suggested that you can beat the house by playing a Martingale... gosh! You'll have a much easier time persuading people if you don't insult them.

lutusp 13y ago
I agree with your point, but in the 21st century, I have a hard time accepting that many people ignore basic scientific principles -- in particular, the null hypothesis, which in essence says that a given proposition is assumed to be false until there's evidence for it. > Plenty of otherwise rationally minded people have a hard time reasoning about this stuff. Rationality is what rationality does. There's a devious investment scam that, once explained, seems obvious, but most people fall for it unless forewarned. I call it the "Miracle Man" scam. Here it is: http://arachnoid.com/equities_myths/index.html#Miracle_Man http://arachnoid.com/equities_myths/index.html#Miracle_Man I would like to live in a world where a scam like "Miracle Man" couldn't work, because people would say "It seems too good to be true, therefore chances are it's not true." But that's not this world, not by any means.

im3w1l 13y ago

>It transfers money from uneducated investors to educated ones And this is exactly what you "proved" could not happen