Beating the Market
The cluster debates whether it's possible to consistently outperform the stock market, contrasting claims of successful strategies and investors like Warren Buffett or Medallion Fund against arguments of randomness, luck, survivorship bias, and the Efficient Market Hypothesis.
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you dont need to beat the market. you just need to beat pure chance to make money
Virtu only lost money trading one day out of 1278 trading days between 2009 and 2014. In the most uncharitable analysis (1278/2; or the lost day happened in the middle), they had a 0.5^639 chance of doing that.Maybe you disagree with 0.5 per day. Let's make it 0.9!...But that's still 5.7 x 10^-30. How many firms do we need to exist for this to emerge by chance?This and website bug bounties being sold on the black market are my two HN crusades. I have heard darts, I have h
What makes you confident a methodology that consistently beats the market exists?
that's the whole point! if randomness can give returns higher than most "financial gurus", what do they really know about the market?
interesting.. how would it explain bridgewater / ray dalio's track record etc?
Think of it like a drug trial: the control is the stock market, the drug is your strategy.If (somehow) beating the market was a 50-50 chance (which is like saying a randomly written chess algorithm has a 50-50 chance of beating Kasparov), the chance of 40 years of gains is 1/2^40, which is less than 1 in a trillion.I'd say that's sufficient evidence to reject the null hypothesis, that the drug is no better than placebo. Just because we don't understand the mechanism doe
The tired coin flipping trope is just dismissive and does nothing to seriously argue against the possibility of people consistently beating the market. Even Warren Buffett, the champion of index funds, has argued against the coin flipping analogy.I've had this discussion several times before, so in lieu of rehashing it I'll just put this here: https://news.ycombinator.com/it
The delicious irony of a person that has outperformed the market betting that it's impossible to outperform the market... and (probably) winning. :-)
You're arguing on HN that you have a long-term strategy that can reliably beat the market. Such a strategy would be worth billions of dollars. You probably don't have such a strategy.Good luck with that though.
Guess you are familiar with http://en.wikipedia.org/wiki/Survivorship_bias? In 2009, there were probably tonnes of people trying to exploit the market using similar low-tech methods as you. Even if all of them were at best break-even, some of them likely made a lot of money on their unprofitable algorithms by pure chance thanks to the size of the cohort. Those few blogged about it and those who lost money didn't. :) I'm