I have read the books. I have two words to sum up his work: ratio spreads. That's his big secret. Look, there are no secrets in this business except hard work, patience and discipline. I know that's not what guys want to hear. The guy sells his books for $500 or whatever the cost is and it makes you think he must know something that no one else knows. The sad truth is he does not.
Randomwalk
- Thread starter harrybachs
- Start date
I have read the books. I have two words to sum up his work: ratio spreads. That's his big secret. Look, there are no secrets in this business except hard work, patience and discipline. I know that's not what guys want to hear. The guy sells his books for $500 or whatever the cost is and it makes you think he must know something that no one else knows. The sad truth is he does not.
There is randolm walk and its sister, the efficient market hypothesis. This debate is old, starting with Bachelier and his paper The Theory of Speculation, probably older than that I am sure. The typical argument is whether or not the market can be beaten, outperformed, traded, as opposed to buy and hold. The market here usually means the sp500. Throw in the term beta here to add to the confusion. This debate has done a lot for thinking about the market, modeling, etc. Otherwise why trade?However, most traders in my opinion, see that there are inefficiencies to be expoited; inside information, arbitrage, black box trading, systems, tape reading, leverage, etc. The truth is that the market is mostly efficient but sometimes overshoots. This beating the markets is complex, if you take out 1987, then your historical data is different. If you show a 3 year return on an average buy and hold mutual fund, it will likely outperform the 5 or 10 year due to our current uptrend. Jack Swager calls it the well chosen example. One of the interesting issues is whether beating the sp500 year in or year out, is luck or skill. My edge is that I don't know shit!!
http://stockcharts.com/education/Overview/randomWalk.html
http://stockcharts.com/education/Overview/randomWalk.html
Stock market isn't random
The efficient market hypothesis doesn't hold up under scrutiny
The efficient market hypothesis doesn't hold up under scrutiny
To the OP:
Haven't read the books, but am familar with the concepts. Lots of discussion going on in another forum about the author's work. Over here at ET look in the options forum, there's been some discussion. Just to expand on what Mav said, the 1 strat book is essentially ratio spreading, but the collar book seems interesting.
Haven't read the books, but am familar with the concepts. Lots of discussion going on in another forum about the author's work. Over here at ET look in the options forum, there's been some discussion. Just to expand on what Mav said, the 1 strat book is essentially ratio spreading, but the collar book seems interesting.
There are empirical observations supporting this thesis. News events like interest rate increases or cuts do not result in instantaneous adjustments in prices as the EMH tells us but often give rise to sustained trends for extended periods of time.
Warren Buffett aid once: "I'd be a bum on the street with a tin cup if the markets were always efficient"
Ron
