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The answer should be obvious. The market isn't predictable at all, for the reason that there are any number of players, each following a private strategy. Witho

by lutusp 12y ago

The answer should be obvious. The market isn't predictable at all, for the reason that there are any number of players, each following a private strategy. Without cheating, without using insider information, you're better off investing in an index fund and tracking the slow but reliable increase in market valuation, instead of trying to track the unpredictable peaks and valleys along the way. More here: http://arachnoid.com/equities_myths http://arachnoid.com/equities_myths People who use the index fund strategy are statistically ahead of all other strategies -- I mean statistically. You can obviously find exceptions, black swans, but as a matter of probability and averages, you're better off in an index fund than any other market investment strategy. Guess who swears by this idea, and who is going to make all his relatives adopt it after he's gone? Warren Buffet.

notastartup 12y ago
But Warren Buffet invests in individual companies using valuation technique to discover under valued companies which the market is ignoring. One peculiar thing about Warren Buffet is that he has strayed away from technology companies, he's always invested in very stable ideas like brand and other economic moats unlike the tech sector which is susceptible to unexpected disruptions, like two boys working in a garage to build a better search engine. He even stayed clear of Microsoft and seems like it fit his plan of holding onto a good stock forever. For those that do not know how to come up with a intrinsic valuation of a company, for example, reading through K's and Q's and figuring out if there's discrepancies in what it actually says and what the market thinks, it's best to invest an index, a large basket of companies and you bet your ass that for a country like United States, it's going to go up in valuation, seeing how well aligned the NSA's global surveillance is poised to benefit American corporations, I'd definitely back American companies, although the intrusion into individual freedom and privacy is jarring, I'll play the dirty capitalist, if it means I can make money work for me.
- lutusp 12y ago
  > But Warren Buffet invests in individual companies using valuation technique to discover under valued companies which the market is ignoring. Yes, this is true, but the possibility exists that Buffet realizes his early success might have arisen from chance, and that his present success arises from the announcement effect (everyone wants to invest in the same stocks he invests in, so he can't go wrong.) I have no idea whether that's so, I won't pretend to have any inside knowledge, but it's certainly true that Buffet has set things up so his inheritors are in index funds and buy & hold, two ideas he has spoken well of over the years.

by lutusp 12y ago

notastartup 12y ago

But Warren Buffet invests in individual companies using valuation technique to discover under valued companies which the market is ignoring. One peculiar thing about Warren Buffet is that he has strayed away from technology companies, he's always invested in very stable ideas like brand and other economic moats unlike the tech sector which is susceptible to unexpected disruptions, like two boys working in a garage to build a better search engine. He even stayed clear of Microsoft and seems like it fit his plan of holding onto a good stock forever. For those that do not know how to come up with a intrinsic valuation of a company, for example, reading through K's and Q's and figuring out if there's discrepancies in what it actually says and what the market thinks, it's best to invest an index, a large basket of companies and you bet your ass that for a country like United States, it's going to go up in valuation, seeing how well aligned the NSA's global surveillance is poised to benefit American corporations, I'd definitely back American companies, although the intrusion into individual freedom and privacy is jarring, I'll play the dirty capitalist, if it means I can make money work for me.

lutusp 12y ago
> But Warren Buffet invests in individual companies using valuation technique to discover under valued companies which the market is ignoring. Yes, this is true, but the possibility exists that Buffet realizes his early success might have arisen from chance, and that his present success arises from the announcement effect (everyone wants to invest in the same stocks he invests in, so he can't go wrong.) I have no idea whether that's so, I won't pretend to have any inside knowledge, but it's certainly true that Buffet has set things up so his inheritors are in index funds and buy & hold, two ideas he has spoken well of over the years.