maybe not, but it's a mystery how anyone can read the size of your post font without getting a headache. unlike you may want to convince yourself, size does matter.
I've never done anything with respect to font size; I commonly just go with the flow. One exception: Medicare. the law requires that I work in 12pt minimum and have 100% of copy pre-approved by CMS before it goes into the field.
Perform poorly in terms of what? Your expected standard of good old greed in the short run? Look at the track record of Warren Buffet or Bill Miller of Legg Mason on a year over year basis. Do you really think you can consistently do that?
Thanks for your comprehensive reply and the specific related data. You make a strong connection between between risk of a given protfolio and its ROI. Your division of total capital into the three venues probably satisfies a lot of wealth building goals for you. It is very possible to consider wealth building from alternative viewpoints than the traditional one you have articulated and follow. To say that these traditions are entrenched is an understatement. You can easily imagine how any person who does not share those views feels while circulating in the domain of these practitioners. As an entrenched sailor who never misses a Block Island or Edlu (sp?) it was always fun to pass the time as an invited strategist to debate the traditions. I still revere having experienced the financial transitions from pre computer to computer mainfraimes to PC dominated global orientaions. The pre quant world was something to behold where the traitions you speak of came into prominence. It definitely was a C+ history Ivy league world for striving for striving for the ultimate balance in everything. My daughter swiped my wooden shaft putter and would never concede it back to me. It was the "right' putter for her. My view is this. A person can go through a congent reasoning process to escape these traditions. The fact that university X's tenured Professor comes to a conclusion using a comparitive analysis of two wrong minded subjects does not prevent one of his protogeges from escaping his confines. todays or tomorrow's Nobel prizes will go to these escapees, I believe. Being told that I am going to learn my lesson by stars of the industry, was and is conventional I guess. For me, I could just never refrain from the logic that I perceived. It is my perception that the best investments are attained from the best opportunities. Best opportunities are defined by quality assessment. The PC has lead to the entry of the public into investing, where heretofore it was the domain of the few. Letting the heritage issues fall away and not be a foundation of investing based upon tradition, led to two paths. Quants and the man in the street are moving to the STREET and beginning to occupy niches. I left the scene of tradition and saw that mainframes could handle data and simply tried to use an 024 to punch out daily decks to deal with daily price movement in the markets. Punching was an exercise in futility compared to using brownlines and a pencil. It is something like being an engineer just out of school and having been told how to read the WSJ (by a prof at that engineering school) and seeing a light bulb go on for "making money" all in the context of the NY Social Register and its traditions for wealth. I recommend to anyone to simply use their talents to discover and learn about making money considering the potential of the markets to give it to you (or allow you to take out the potential the market offers). The money is there continually and irrefutably by any quality statistical or finacially measured manner. Poor analysis and measurement yields accordingly. Once the traditional approaches are mapped onto the market universe, you can see that the alternative spaces for high money velocity wealth building may or may not overlap. Considering market shares vis a vis trades completed by a particular venue, it turns out that various approaches do not compete for wealth protions and upper trade limits quantification has only to do with the approaches strategies. So all of this shows that market risk is not a function of the market's operation but merely a function of the trader's approach. Specifically in an approach the risk comes down to the rules for remaining in the market as the market behaves. Any approach that is designed to meet a goal of high money velocity for wealth build automatically goes to areas on the universe that eliminate all risks while being in the market. Once you invent five or so tools for handling this in the application of a given approach, they handle most of the use of capital over time in the markets. Make a list of a 100 inventions and see how they are distributed by use over the universe of the markets and the approaches for those parts of the markets universe. As an example, take DELL. I advocate that it is good for about 60 to 70% a year for capital appreciation. Therefore, I cannot make it part of my list for investing since it does not perform adequately. Other do use it to make profits, however. It could be used in all three of the partitions mentioned by drS that I am responding to. Each would make differing levels of ROI/per year. Personally, I cannot stand the risk of any of those three situations; nor could I settle for only 70% a year from DELL. I am attaching, once more a possible way to approach this. No one can easily reason a pathway to the traditional approaches of the industry.
You're funny. The fact that you put that much thought into it shows that you do not fully understand. Yes I am being general and not absolute, of course there are a few select funds that are excellent even over long term. The average Joe Shmoe invests in the market through mutual funds & pension funds. There are more mutual & pension funds out there than stocks. Been saturated like that for a while and by far, most investment of the mass money in this country is done through mutual funds & pension funds. (let's exclude the recent fad of hedge funds). Money of the masses is dumb money. That's how markets work. You can extrapolate further going into the mechanics of the mutual fund compensation structure and the dynamics of moving large funds in the market but it all leads to the same conclusion.
Thought? I'm regurgitating basic financial economics. This stuff is 40 years old. What makes me think twice is that you don't even recognize it. http://www.stanford.edu/~wfsharpe/art/active/active.htm Martin
Hydro's right. They have basic indicators showing the flow of cash into the mutual funds and its at a 5 or 7 year high, and we're also past the peak of the SP500. Always happens, dumb money chases after money's been made. For trading systems, if you run $1 billion you can get 30-40% annually out of the SP500 but if you run $50 billion you'd be hard pressed to get 25%. Anyone have any data on the decline of returns as capital increases?
He was telling you that you are way off base and have a very distorted view of things. this means that you are not well read and that you have, in effect glommed onto something that is relatively uniportant and think that it is important. read 1,000 posts here and see if you can find out that most people are also in the same boat that you are in. this will be tough for you to take or even understand. Don't worry about it. Most people have a very long way to go too. Read Bogle on Bogle as a primer on some of the things you have not sorted out.
Like I said, you're putting too much thought into it, the answer is simple. I do not necesarily disagree with the economic studies or the numbers that can break down the dynamics behind moving large capital, I just point to the obvious outcome. The markets are not academic and never will be. Financial economics still try to push the idiotic efficient market hypothesis. It's just dumb money & smart money, the poor and the rich, fear and greed. Just different variations of the tools & tricks used every generation.