Was Graham Right or Wrong?

Quote from jack hershey:

Long ago the market tradingand investment philosphies got started by people who were interested in improvement.

Since then there were several forks in the road.

One of those forks took most people away from the basics and onto another path.

Entropy has prevailed as one would expect.

One of the major compensators for this sad state of afairs is the "fix" put in when people lost sight of Graham's cited principle.

Money Management doesn't fix the mistake of prediction and betting on the prediction.

What fixes prediction is stopping the practice and returning to the principles in the first place.

That is not going to happen, however and traders get the consequences in the form of the current failure rate.

Graham was correct and what he said continues to be correct.

Is a substitute needed for prediction. No, predictin is not necessary.

What about money management? Google: profit factor, Sharpe ratios and risk/reward. Examine how they work in the absence of prediction and betting.

What makes trading successful is the trader and the market in a partnership where each party does his job and does not ursurp the other's responsibilities.

No one trades in the fture and the only pace trading takes place is in the NOW. All that is required is to do your job and listen to the market in the present.
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Thanks Jack. I always appreciate eloquently worded and cogent responses, which you achieved in spades.
 
Quote from Pa(b)st Prime:

Graham's thoughts in this regard are of paramount importance. Graham would correctly state that the highest probability of profit is derived from the purchase of securities at a price below their intrinsic or "book" value. In todays bull market there's little sense looking for values. But in a bear they abound.

Further however, Graham recognizes that just because you spot an obvious bargain does not mean that the market will move immediately in your favor. There's times when liquidation is so great and investment dollars so few that a "great buy" may be rewarded with sluggish or non-existent gains for a prolonged period of time. A far cry from this pumped ultra-liqidity driven environment. This euphoria too will pass and sometime in the future a new generation will be forced to learn the wisdom of Graham.
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Pabst - I do believe you are correct. This is why Graham's sage wisdom has stood the test of time, through all kinds of market cycles.
 
Quote from ByLoSellHi:

Graham said no one could predict where markets would head.

So, if he was right, why do so many people try? - bright, articulate and analytical people?
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Because nobody can tell you with a 100% certainty what the next flip of a coin will be... but I can tell you what the next 100 coin tosses will be... that's probability... that's the successful trader
 
Quote from Trader28Lite:

Because nobody can tell you with a 100% certainty what the next flip of a coin will be... but I can tell you what the next 100 coin tosses will be... that's probability... that's the successful trader
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Bingo ! Same as the casino. Casinos have a tiny but sure edge and they make money on the high number of bets/transactions.
Same in trading. My best system which is up 48% fot the year is only 56% right (profits) and profits/losses ratio is just 1.17. But the combination of the two makes it a successful system (So far!).
 
Quote from ByLoSellHi:

Graham said no one could predict where markets would head.

So, if he was right, why do so many people try? - bright, articulate and analytical people?
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So many try because so many do not know a thing about probability and statistics. My guess is even if you were able to communicate clearly to these people how efficient the market really is they still would not pay it any heed because of ego and greed.

One other thing: the majority of money made through market activity is through broker fees not trading.
 
The guy who wrote a book about value investing and security analysis s quoted as saying that people cannot predict the markets?

You sure you are quoting him correctly?

Besides good investors do not try and predict, the interpret what is going on in the market and invest with the trend, be it intraday, short-term or long-term.



Quote from ByLoSellHi:

Graham said no one could predict where markets would head.

So, if he was right, why do so many people try? - bright, articulate and analytical people?
More...
 
investing and trading are two different thing.

most trade system is trying to find the odds in favor of it

while investing involves looking for value (Later on Peter Lynch expand this idea to "growth" as well)


In early days, without help of computers and instant information, trading is really difficult to do.

Modern technologies provides necessary tools for people go from investing to trading.

This is why people is "predicting" direction of market. (If they are right more than 50% of time, they can make money)
 
Graham was wrong. In fact there are many of you ET forum guys that are constantly predicting that this or that is going to happen. In fact, to prove to you that we all have the ability to predict events in the future with high accuracy, i'm going to make not one, but two predictions, right here and now. And not only that, i will personally guarantee these predictions to be one-hundred percent accurate: 1. The market will crash; 2. You are going to die.

Oh, and Graham was the inventor of the "Graham" cracker of course.
:p
 
Quote from piezoe:

Graham was wrong. In fact there are many of you ET forum guys that are constantly predicting that this or that is going to happen. In fact, to prove to you that we all have the ability to predict events in the future with high accuracy, i'm going to make not one, but two predictions, right here and now. And not only that, i will personally guarantee these predictions to be one-hundred percent accurate: 1. The market will crash; 2. You are going to die.

Oh, and Graham was the inventor of the "Graham" cracker of course.
:p
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You are forgetting 3. everything will change and 4. the rate of change is increasing over time.

Merry Christmas an best wishes to everyone for 2007.

Maria.
 
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