historical results fallacy or ?????

marketsurfer · Oct 4, 2003

the standard disclaimer on any type of fund management document is as follows--- "past performance is not indicative of future returns" or something like that. if this is the case, why the emphasis on historical performance of fund managers, etc ?? the number 1 ranked manager's hot streak just might be ending the day you invest OR the lowest ranked manager may just be starting his hot streak. this method of determining who to invest with by historical results appears to be a fallacy and contradicts the standard disclaimer from the SEC. any thoughts ??

best,

surf

Grob109 · Oct 4, 2003

2789 posts is not indicative of the 2790th post.

There is no guarantee anything of any particular quality will come next.

dbphoenix · Oct 4, 2003

Quote from marketsurfer:

the number 1 ranked manager's hot streak just might be ending the day you invest OR the lowest ranked manager may just be starting his hot streak

Taleb would suggest that this is most likely the case, that the hot manager has a higher probability of winding down his streak.

marketsurfer · Oct 4, 2003

Quote from dbphoenix:

Taleb would suggest that this is most likely the case, that the hot manager has a higher probability of winding down his streak.

yes. i also maintain that there needs to another method of determining a manager's odds of success. the "odds" if you want to call it that, would also need to be directly correlated to the "time" of one's investment with the manager. perhaps an ongoing psychological profile ??

best,

surfer

marketsurfer · Oct 4, 2003

Quote from Grob109:

2789 posts is not indicative of the 2790th post.

There is no guarantee anything of any particular quality will come next.

very well said.

you proved your own point in one awkward sentence.

LOL !

dbphoenix · Oct 4, 2003

Quote from marketsurfer:

very well said.

you proved your own point in one awkward sentence.

LOL !

That's the only kind of sentence Jack is capable of

Banjo · Oct 4, 2003

What is there but the past record. What it comes down to is selling trust and trust takes time to build. They haven't spent any time with you so therefore they need to see how your time was spent in an attempt to define your trustworthyness.
If I ever had the urge to manage non familial funds I'd create a new position in the market place. I'd walk into the future throwing off the great "sanctity" of money as presented by the expensively draped bastion of theives of Wall St. and pounce on the ripe market niche of fullfillment seeking youth. I'd sell promise, not security. For openers I'd get a list of under 30 males driving exotic cars and living in the right zip codes. I'd hold annual meetings at the Hard Rock Hotel in Vegas with a few starlettes , exotic cars ,and sports celebs around. I'd sell "La dolce vita", maybe even name the fund that. The wealthy young of the world are connected by the net, media, lifestyle, and are not scared money. They are the emerging force, the boomers are facing their end and moving their wealth to the next generation.

marketsurfer · Oct 4, 2003

wow ! i like your style and verve. the MTV generation wealthy are the next frontier for managed funds.

prosperity to you,

surfer

Don Bright · Oct 4, 2003

Hey Banjo, don't count us all out yet. Good post, but I hope you don't start spending that money like all the GenXers did (Silicon Valley dreams) during the Naz bubble (anyone remember buying Qualcomm at above $500 per share?? lol

I agree, that the youth of today will hold the riches of tomorrow, and am just as certain that the "successful minority" of young traders will be around a long time. Provided they don't squander the $$ too quickly. The Hard Rock is nice, but only if you're getting everything comped, room, meals, etc. everything but the ladies.

Backtesting is pretty useless in the market (except for the testing of programs, etc. to see if the software responds correctly). Past performance is measured in "how good was your last movie" and " how much did you pay in taxes on your trading profits last quarter".....even us old farts have to keep adapting to changes in the market (old rhetoric, but nonetheless still "fresh").....

Don

dbphoenix · Oct 4, 2003

Quote from Banjo:

the boomers are facing their end and moving their wealth to the next generation.

I wouldn't take that to the bank. Many "boomers" are planning on spending it all before they die and letting their kids take care of themselves. There is "old" money, of course, but those who have it probably aren't trading stocks.