Since you brought up the "coin flip" issue, which inevitably leads to the "streak" issue, you should check out the Legg Mason analysis I linked. Here is what they have to say about streaks of market-beating performance amongst fund managers: "Streaks in the investment business have not been studied in great detail, and most critics write off streaks as the product of chance. A streak is defined as consecutive years of generating returns after costs in excess of a benchmark. For example, one pundit suggested that there was a roughly 75 percent probability that over the past 40 years some fund would generate a streak of 15 years, the duration of the longest known streak by a mutual fund. One needs a complete disregard for the empirical facts to arrive at such an estimate. The only way to get there is to assume a large starting sample (in the thousands) and a coin-toss model. There were, in fact, 170 mutual funds in 1965 (the number didnât exceed 1,000 until 1988), and only about 40 percent of mutual funds have beaten the market annually, on average, with a standard deviation of about 20 percent. Andrew Mauboussin and Sam Arbesman analyzed mutual fund streaks over the past four decades or so, capturing over 50,000 mutual-fund years. Their null model applied the observed outcomes in each year to the funds in existence, capturing the role of chance. They simulated 10,000 mutual fund worlds and compared the simulated results to the actual record of streaks. Similar to Arbesman and Strogatz, as well as Henderson, Raynor, and Ahmed, they found evidence that some funds generated streaks beyond what chance would dictate. They also observed that the funds that had established the streaks had a much higher âbatting averageââ the percentage of years that they successfully beat the benchmarkâthan did the average of all funds" So, I will say again that denying the existence of some level of trading skill is inconsistent with the data. My best guess for why less than 50% of individual traders are profitable is because individual traders suffer from cognitive biases, especially overconfidence and recency biases, which actually means their trades are not "fair" in the same way a coin toss is "fair". Also, since institutional traders trade in such a size that they can potentially be buying at any given moment from 2 or 100 small traders, it gives 1 institutional trader the chance to make multiple individual traders unprofitable at the same time.
How much did the default on gold by Nixon , and the money printing contribute to these blind monkeys' performance , something you would call skill. How much of skill was based on insider info ,wall street sentiment and advantage of being in with wall street? What skill did they , other than robbing AUM? The illusive Dow theory , masking losses and bankrupts from S and P by not including them on indexes , and as a result losses therefrom are never shown on S and P returns .How much delusion are we under about the performances of fund managers? Do they ever tell you true S and P returns , after losses for inflation and money printing and masking losses from bankrupt companies.Wall street crooks will never give you the answer. If they do ,deduct the 1.5 % average annual admin charges for fund management and and show true returns from above. I really don't believe you have true answers. A prostitute and a pimp go every night on wall street for business , other prostitutes and pimps do the same , how much do the pimps contribute in overall additional revenue to all the prostitutes incomes?The pros overall lose money to the pimps , the pimps have an edge. Now E S can explain why he has to work as a Gigolo.
I linked to the paper. If you actually want answers to your question, rather than assume the answers prove your point, go read the paper. I'm not your fucking secretary.
You ain't got a fuckin clue ,you bought what wall street sold u. Kids do not know how to suck milk from their mums , it comes naturally.You sucked you milk from wall street ,.
Yeah, that must be it. I knew your response would be asinine, but you actually outdid yourself with this one. You now join the only other person I have on ignore, Jack Hershey. You must be proud to be in such illustrious company.
Perfect. Now we have a hypothesis - "all institutional alpha is generated via inside information". Do you feel that your hypothesis agrees with the fact that there are consistently profitable interest rates traders (widely traded non-information sensitive instruments) or HFT (timescale is inconsistent with any kind of information transfer)?
Two different types of markets , one relies on fundamental information with interest rates , the other on automated scalping for very small profits .There is no need for insider information. The stock market managers rely on other edges , if any .Many of these blind monkey managers were just lucky to be invested in the right stocks , the money printing rewarded these lucky ones . The managers are like pimps ,they reduce your returns.How come there are negative returns for last 10 years ,after charges?
Of all the beautiful girls that made in hollywood , there were others prettier and better suited , others never made it.What skill did the successful ones have? They were in the right place at the right time , some were sitting on the producers lap.The better performing funds were luckily invested in the right sectors and companies , they happened to be with the right people on wall street.The hedge funds which performed well in the 2007 crisis were sitting on Goldman's lap.One fund manager did very well ,whilst Goldman Sachs put their trousers down. http://www.sec.gov/news/press/2010/2010-59.htm That is skill on Wall street How Three Decades of Wall Street Greed and Government Mismanagement Destroyed the Global Financial System (Google eBook) http://books.google.co.uk/books/about/The_Sellout.html?id=3E_EmN6Ax34C&redir_esc=y What skill?