Of course, the role of luck in market is huge. But among the sequential winners, you will tend to find people who win a bit more than 50% of the time. There’s many opportunities to do something very stupid (e.g. invest in hydrinos) and lose.
Of course, the record is full of people who make money for years, only to explode later on (look at John Meriwether’s career up until Long Term Capital Management blew up so spectacularly). Were these people always just lucky? We can never know. I take Taleb’s point (filtered through Gladwell) to be that the base of people actively trading is so large that we should expect people who are successful for years (possibly even whole careers) even if all that is operating is luck, so past performance is no guarantee of future gains. I don’t entirely agree, but its decent advice to keep in mind. Especially bad for the home investor is constantly chasing the funds that most recently made money (for some definition of recent)- generally the fees went up on the backs of the improved performance, so as performance falls back to the market value the investors will make less (lost to the higher fees).
Also an irony worth pointing out- Randy Mills of Blacklight Power/Hydrino fame has tried to create credibility for his company by pointing to the savvy investors who did get in board.
Of course, the record is full of people who make money for years, only to explode later on (look at John Meriwether’s career up until Long Term Capital Management blew up so spectacularly). Were these people always just lucky? We can never know.
If the best win at a rate of 60% and worst at a rate of 40% , plenty of the best will explode later on.
Also an irony worth pointing out- Randy Mills of Blacklight Power/Hydrino fame has tried to create credibility for his company by pointing to the savvy investors who did get in board.
The point is that knowing some physics protects you from the likes of Randy Mills. So you do a bit better than mere luck. Also, if you’re a so called savvy investor, and you invest into some crap like hydrinos, you may even get gains (if you sell after others jump onto the bandwagon just because you did).
Of course, the record is full of people who make money for years, only to explode later on (look at John Meriwether’s career up until Long Term Capital Management blew up so spectacularly). Were these people always just lucky? We can never know. I take Taleb’s point (filtered through Gladwell) to be that the base of people actively trading is so large that we should expect people who are successful for years (possibly even whole careers) even if all that is operating is luck, so past performance is no guarantee of future gains. I don’t entirely agree, but its decent advice to keep in mind. Especially bad for the home investor is constantly chasing the funds that most recently made money (for some definition of recent)- generally the fees went up on the backs of the improved performance, so as performance falls back to the market value the investors will make less (lost to the higher fees).
Also an irony worth pointing out- Randy Mills of Blacklight Power/Hydrino fame has tried to create credibility for his company by pointing to the savvy investors who did get in board.
If the best win at a rate of 60% and worst at a rate of 40% , plenty of the best will explode later on.
The point is that knowing some physics protects you from the likes of Randy Mills. So you do a bit better than mere luck. Also, if you’re a so called savvy investor, and you invest into some crap like hydrinos, you may even get gains (if you sell after others jump onto the bandwagon just because you did).