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The entire $10trn financial industry exists on the premise that markets are not efficient. Even Warren Buffet has said himself, "I think you will find that a

The entire $10trn financial industry exists on the premise that markets are not efficient. Even Warren Buffet has said himself, "I think you will find that a disproportionate number of successful coin-flippers in the investment world came from a very small intellectual village that could be called Graham-and-Doddsvill" All the successful investors seem to come from the same investment zoo!! Number of consistently successful traders and hedgefund managers do exist. I agree 90% can't beat the market but I am trying to find the 10% that do beat the market consistently through ArbitrageDude. Do you find it bizzare the buffet tends to make the right trade everytime?? Do you find it bizzare Jim Simmons returns are 30% annualized consistently Also, Please read Robert Shiller's (Nobel Prize) winner's response to efficient markets. He tells it better than I do. http://blog.supplysideliberal.com/post/82659078132/robert-shiller-against-the-efficient-markets-theory http://blog.supplysideliberal.com/post/82659078132/robert-sh... i understand what your'e saying about probability and independent trials. Also my financial media lacks accountability. My website tracks everyone's trading record so you can see for yourself if Jim Cramer's recommendations are worth listening to. FT, WSJ, barrons, none of these tabloids provide any accountiblity record of their recommendations.

lutusp 12y ago
> Number of consistently successful traders and hedgefund managers do exist. Yes! Absolutely! Half of them are more successful than chance and half less! In the same way, if I flip a fair coin, roughly half the flips will confirm my prediction that I am a genius -- or that I don't know anything about probability. This requires a bit of science: 1. There are "successful" investment houses and individuals. 2. What's the reason? Is it stock picking genius? Or is it the blind workings of probability? 3. Easily answered -- if an investment house publishes its predictions, and if the predictions consistently beat the market, then the SEC will step in and arrest those responsible for insider trading. 4. Guess how the SEC detects insider trading. Yep, you guessed it -- they do better than market averages. > ... so you can see for yourself if Jim Cramer's recommendations are worth listening to. But I can tell you in advance that they aren't. When they succeed (beyond a chance expectation of 50%), it will be because of the announcement effect: http://www.investopedia.com/terms/a/announcment-effect.asp http://www.investopedia.com/terms/a/announcment-effect.asp A given viewer is well advised to ignore Cramer's advice for what should be perfectly obvious reasons, if people were only educated in skepticism and common sense. > I agree 90% can't beat the market but I am trying to find the 10% that do beat the market consistently through ArbitrageDude. I was right. You really don't understand probability. If you succeeded in finding the magic 10%, you would only have isolated a temporary probabilistic anomaly, a "black swan". Remember that, in science, an untested claim is assumed to be false until incontrovertible evidence proves otherwise (the "null hypothesis"). Your clearly stated position is that an idea is true until proven false -- the opposite of the scientific outlook. > FT, WSJ, barrons, none of these tabloids provide any accountiblity record of their recommendations. Yes, and seasoned investors don't care, because they know these recommendations are worthless. > Please read Robert Shiller's (Nobel Prize) winner's response to efficient markets. Your frequent allusion to authority (yours and that of others) tells me that you don't understand science, which rejects all authority, relying instead on direct evidence.
- arbitragedude 12y ago
  Well you dropped buffets name first. I only shared Shiller's article because I was too lazy to type out the conditional probability. Off the 10% of the people, who beat market handily? If they all happen to be deep value investors. Will you still conclude blackswan? Or would you start thinking Conditional probability
  - lutusp 12y ago
    > Well you dropped buffets name first. Yes, but not as an authority. Your references all had college degrees or prizes listed, as though that added weight to their opinions. My Buffet example was limited to saying how he dealt with popular equities mythology, i.e. by rejecting it out of hand. > Off the 10% of the people, who beat market handily? Do you understand anything about probability? For a sufficiently large population of investors, even in a market that doesn't gradually increase in value over time, some of those investors will become fabulously wealthy by chance alone. As shown here: http://arachnoid.com/equities_myths/index.html#Market_Model http://arachnoid.com/equities_myths/index.html#Market_Model Quote: "In this random market, with no investment strategy, the most successful of the 100 managed-portfolio investors increases his original investment by 2,330%, solely because of chance." Now imagine the results for an investor pool of a million investors instead of 100. > Will you still conclude blackswan? Or would you start thinking Conditional probability 1. If an investor makes a killing, why would he care if it's a black swan or the outcome of conditional probability -- and has it occurred to you that both terms mean the same thing? 2. Learn about science and probability. Stop making assertions about a system you clearly don't understand.
    - arbitragedude 12y ago
      So if 10% of the people outperform the market and they all happen to be value investors", is that a random event?
      - lutusp 12y ago
        > So if 10% of the people outperform the market and they all happen to be value investors", is that a random event? Yes, of course -- that's the default assumption until there's reliable evidence pointing to another conclusion. But if you were a deep thinker, you would realize the problem in your alternative hypothesis -- assuming certain individuals are able to read the market and reliably choose winners, then: 1. They would stop talking to ordinary investors and directly invest their own rapidly increasing funds. 2. Following obvious principles, they would drain the market of its capital. 3. Not being stupid and seeing a game they cannot win, businesses would react by refusing to raise capital using equities. But that hasn't happened, ever, even once. The conclusion a scientist makes is that this stands as evidence against the idea that there is a reliable, consistent winning strategy for playing the market. And to think, you could have come to this self-evident conclusion on your own.

lutusp 12y ago

> Number of consistently successful traders and hedgefund managers do exist. Yes! Absolutely! Half of them are more successful than chance and half less! In the same way, if I flip a fair coin, roughly half the flips will confirm my prediction that I am a genius -- or that I don't know anything about probability. This requires a bit of science: 1. There are "successful" investment houses and individuals. 2. What's the reason? Is it stock picking genius? Or is it the blind workings of probability? 3. Easily answered -- if an investment house publishes its predictions, and if the predictions consistently beat the market, then the SEC will step in and arrest those responsible for insider trading. 4. Guess how the SEC detects insider trading. Yep, you guessed it -- they do better than market averages. > ... so you can see for yourself if Jim Cramer's recommendations are worth listening to. But I can tell you in advance that they aren't. When they succeed (beyond a chance expectation of 50%), it will be because of the announcement effect: http://www.investopedia.com/terms/a/announcment-effect.asp http://www.investopedia.com/terms/a/announcment-effect.asp A given viewer is well advised to ignore Cramer's advice for what should be perfectly obvious reasons, if people were only educated in skepticism and common sense. > I agree 90% can't beat the market but I am trying to find the 10% that do beat the market consistently through ArbitrageDude. I was right. You really don't understand probability. If you succeeded in finding the magic 10%, you would only have isolated a temporary probabilistic anomaly, a "black swan". Remember that, in science, an untested claim is assumed to be false until incontrovertible evidence proves otherwise (the "null hypothesis"). Your clearly stated position is that an idea is true until proven false -- the opposite of the scientific outlook. > FT, WSJ, barrons, none of these tabloids provide any accountiblity record of their recommendations. Yes, and seasoned investors don't care, because they know these recommendations are worthless. > Please read Robert Shiller's (Nobel Prize) winner's response to efficient markets. Your frequent allusion to authority (yours and that of others) tells me that you don't understand science, which rejects all authority, relying instead on direct evidence.

arbitragedude 12y ago
Well you dropped buffets name first. I only shared Shiller's article because I was too lazy to type out the conditional probability. Off the 10% of the people, who beat market handily? If they all happen to be deep value investors. Will you still conclude blackswan? Or would you start thinking Conditional probability
- lutusp 12y ago
  > Well you dropped buffets name first. Yes, but not as an authority. Your references all had college degrees or prizes listed, as though that added weight to their opinions. My Buffet example was limited to saying how he dealt with popular equities mythology, i.e. by rejecting it out of hand. > Off the 10% of the people, who beat market handily? Do you understand anything about probability? For a sufficiently large population of investors, even in a market that doesn't gradually increase in value over time, some of those investors will become fabulously wealthy by chance alone. As shown here: http://arachnoid.com/equities_myths/index.html#Market_Model http://arachnoid.com/equities_myths/index.html#Market_Model Quote: "In this random market, with no investment strategy, the most successful of the 100 managed-portfolio investors increases his original investment by 2,330%, solely because of chance." Now imagine the results for an investor pool of a million investors instead of 100. > Will you still conclude blackswan? Or would you start thinking Conditional probability 1. If an investor makes a killing, why would he care if it's a black swan or the outcome of conditional probability -- and has it occurred to you that both terms mean the same thing? 2. Learn about science and probability. Stop making assertions about a system you clearly don't understand.
  - arbitragedude 12y ago
    So if 10% of the people outperform the market and they all happen to be value investors", is that a random event?
    - lutusp 12y ago
      > So if 10% of the people outperform the market and they all happen to be value investors", is that a random event? Yes, of course -- that's the default assumption until there's reliable evidence pointing to another conclusion. But if you were a deep thinker, you would realize the problem in your alternative hypothesis -- assuming certain individuals are able to read the market and reliably choose winners, then: 1. They would stop talking to ordinary investors and directly invest their own rapidly increasing funds. 2. Following obvious principles, they would drain the market of its capital. 3. Not being stupid and seeing a game they cannot win, businesses would react by refusing to raise capital using equities. But that hasn't happened, ever, even once. The conclusion a scientist makes is that this stands as evidence against the idea that there is a reliable, consistent winning strategy for playing the market. And to think, you could have come to this self-evident conclusion on your own.