Some people win the lottery on their first try. Some even win twice. Doesn’t mean that you win on average or that there is a way of consistently winning.
Winning the lottery on your first try, or just frequenting a website that managed to pick a lottery winner on its first try (analogous to how Bitcoin was pretty much the only investment opportunity to be discussed on LW aside from the standard “buy index funds”), is certainly Bayesian evidence for your being able to win the lottery on average. It’s just that the prior for it is so low that you don’t think it’s likely even after updating.
This isn’t the case for EMH, given that even economists disagree among themselves about whether EMH is true, or which form of EMH is true.
On second thought, I’m not sure this is true even in the lottery case. Would you really not buy a ticket if the website that previously picked a lottery winner announced a second prediction?
Well, no, it’s more like, “I won the lottery twice (figuratively), last time with the help of Less Wrong. I’m not sure how to do it again, but if I encourage LWers to think in that direction, maybe they’ll find and point out the next opportunity too.”
Gold has also been discussed as an investment opportunity, as has high frequency trading. More broadly discussed have been things like “start a company that does (X)”.
Goldman Sachs is not lucky to be profitable year-after-year. But you are not Goldman Sachs. They have hard-to-reproduce advantages (“moats”) in terms of social and organisation capital, client and peer relationships, political access, intellectual property, etc, etc. And Goldman Sachs can’t just effortlessly expand—they can’t just decide “Right, let’s make more money, let’s find new arbitrages.” They are at the scale and profitability they are for a reason. And even Goldman Sachs was lucky, to get to its current position. When Goldman Sachs was founded, the odds were against it becoming what it is today. If you found an investment bank today, you are unlikely to be as successful as Goldman Sachs.
Or, to put it in more down-to-earth terms: giving up on your education to become a professional footballer is a bad move for almost everyone, and a very risky move even for the highly talented. This is in no way negated by the fact that Zlatan Ibrahimovic earns millions every single year.
“The odds were against them” doesn’t mean they were lucky. It means they beat the odds. They made their own luck, as the saying goes. Frequentism doesn’t apply here. They are picking winners, not pulling them randomly from an evenly distributed set.
Some people win the lottery on their first try. Some even win twice. Doesn’t mean that you win on average or that there is a way of consistently winning.
Winning the lottery on your first try, or just frequenting a website that managed to pick a lottery winner on its first try (analogous to how Bitcoin was pretty much the only investment opportunity to be discussed on LW aside from the standard “buy index funds”), is certainly Bayesian evidence for your being able to win the lottery on average. It’s just that the prior for it is so low that you don’t think it’s likely even after updating.
This isn’t the case for EMH, given that even economists disagree among themselves about whether EMH is true, or which form of EMH is true.
On second thought, I’m not sure this is true even in the lottery case. Would you really not buy a ticket if the website that previously picked a lottery winner announced a second prediction?
You won the lottery twice. So is what you’re saying I should now invest in all the stuff you are investing?
Well, no, it’s more like, “I won the lottery twice (figuratively), last time with the help of Less Wrong. I’m not sure how to do it again, but if I encourage LWers to think in that direction, maybe they’ll find and point out the next opportunity too.”
Gold has also been discussed as an investment opportunity, as has high frequency trading. More broadly discussed have been things like “start a company that does (X)”.
I guess Goldman Sachs is just damn lucky?
Goldman Sachs is not lucky to be profitable year-after-year. But you are not Goldman Sachs. They have hard-to-reproduce advantages (“moats”) in terms of social and organisation capital, client and peer relationships, political access, intellectual property, etc, etc. And Goldman Sachs can’t just effortlessly expand—they can’t just decide “Right, let’s make more money, let’s find new arbitrages.” They are at the scale and profitability they are for a reason. And even Goldman Sachs was lucky, to get to its current position. When Goldman Sachs was founded, the odds were against it becoming what it is today. If you found an investment bank today, you are unlikely to be as successful as Goldman Sachs.
Or, to put it in more down-to-earth terms: giving up on your education to become a professional footballer is a bad move for almost everyone, and a very risky move even for the highly talented. This is in no way negated by the fact that Zlatan Ibrahimovic earns millions every single year.
“The odds were against them” doesn’t mean they were lucky. It means they beat the odds. They made their own luck, as the saying goes. Frequentism doesn’t apply here. They are picking winners, not pulling them randomly from an evenly distributed set.