As a simple case, suppose that she had a fondness for tech stocks and started selecting and trading them in the spring of 2000. Wrong again. This is what, I think,is called well chosen example To clarify, we talk about randomness, so she would be selling short or buying randomly.
This introduces a whole new set of issues. Do you know anyone who truly acts randomly? I don't. Anyone looking at the stock market would have to come up with some type of selection process for their picks- be it based on technicals, fundamentals, P/Es, CNBC, discussions with the neighbors, advice from the cat...I doubt this lady would have truly thrown darts at a newspaper page or run a randomizing letter engine to pick stock symbols. Just because we can't take human behavior into account is no excuse for taking it out, because trying to remove it altogether simply results in the false assumption that humans behave like computers! Because no one and nothing truly exists in a vacuum, experiments and hypotheses that are executed in a vacuum can have hidden flaws and surprise shortcomings that no one has even thought of.
This introduces a whole new set of issues. Do you know anyone who truly acts randomly? I don't. That's right. I would like to expand little bit. I think that's where importance of consistently following rules comes in. If you don't have them (follow them) you just REACT to the whims of the market and you consistently lose (even if you cut loses). There is a difference between playing the market and BEING PLAYED by the market. Consistent following of the rules is more important then rules itself as long as they make sense.
Darkhorse, haha. That's right. Finally someone with some sense. When I was at a quant fund(actually considered to be small to medium sized), and we were running close to $2B. And on MOST days(95%), we don't even 1) read the news 2) check on prices(kinda hard with a few hundred to thousand stocks in your portfolio). Yet, the totally quantatitative system produced steady returns month in and month out on roughly $2B. And we were just one "small" quant shop out there. And we definitely didn't scalp for 20-30cents, because we couldn't with that size. - trader99
funny to see all this old stuff come back to the surface. maybe it's time to dig out the old journals and do another assessment of how much the landscape has changed from then to now (or rather, how much my eyes have changed)
Silver, yeah. money mgmt and exit strategies are often overlooked though they are probably more important than anything..
With all this talk of randomness, everyone seems to be forgetting that this lady was using this system during one of the biggest bull markets in history. She probably just jumped on a tech stock rode it up 10% and then rolled into another tech stock and watched it go up 10%, etc, etc, etc... Who knows if she is still doing it now or is just living on some tropical island somewhere (or more realistically Florida) blowing her fortune and laughing at us for discussing all of this. I personally don't think anyone would be crazy enough to be using this system in this market. If you are, good luck. Besides, with all the people around here who know the secret of the holy grail , why are we discussing randomness. They know exactly which way the market is going, so there is nothing random about it except for the gyrations the hit us with on a daily basis to keep us little folks down and shake us out of our hard earned money.
Man, I read through all that just to get here? Let me re write the story. A woman made money. How did she do it? She bought more stocks that went up instead of down.