Impossible to Beat?

[garfangle]

Even though most everyone wants above average returns (better than the market), many experts from John Bogle to Nassim Taleb have said this is impossible and over the long term performance fluctuations return to the mean. For every winning fund there is a corresponding losing fund in the aggregate (relative not absolute). Two possible ways to take advantage of this fact is through index fund investing (Bogle) and making bets that large out-of-money options are mispriced (Taleb).

Why are market players fooled by randomness? Because they think they can predict the future, when they cannot (except in the short-term or through insider information). Take a look at two graphs labelled Mystery and Mystery 2. Which one is a graph of a real stock and which was a random computation?

Check the following posts:

 

[garfangle]

mystery

 

[garfangle]

mystery 2

 

[baggerlord]

I would say the 2nd one is the random chart. But even on this chart money is to be made by trading breakouts from consolidation.

 

[garfangle]

One particular note: the randomly generated chart was done by formula via Excel and transfered over. The numbers chosen in it were not manually inputed. The spreadsheet formula can replicate a variety of charts that are immistakeable from the real thing.

 

[deadreader]

looks like Ebay to me

 

[1contract]

Was the random one the first one generated - or did you generate lots of random ones, and pick the best looking one? It makes a difference.

 

[IN2WIN]

Quote from garfangle:

Even though most everyone wants above average returns (better than the market), many experts from John Bogle to Nassim Taleb have said this is impossible and over the long term...

As usual, the "experts" are wrong.

Or maybe it's just that there are "exceptions" to every rule!!!

PS: any chart that does not move in a horizontal line will permit profit opportunities if you know where to look. And if it goes horizontal, just write calls and puts and take the profits that way!

 

[onewaypockets]

"many experts from John Bogle to Nassim Taleb have said this is impossible and over the long term performance fluctuations return to the mean"

The experts comments are self serving, they would prefer that we all just parked our money at their mutual funds and let their "experts" manage it.

Comments like this are more "noise" to tune out. I guess they are right in a way thou that most individual "traders" cannot in the long term out trade the indexes.

 

[snooptrader]

Quote from garfangle:

One particular note: the randomly generated chart was done by formula via Excel and transfered over. The numbers chosen in it were not manually inputed. The spreadsheet formula can replicate a variety of charts that are immistakeable from the real thing.

Yo dawg. This thread makes no sense.

And, what does "immistakeable" mean?