I think one very important principle you ignore here are the implications of what might be called the generalized weak efficient markets hypothesis. When it appears that DIY research based on publicly available information offers a potential for huge gains, the first thing one should ask oneself is why everyone (or at least a large number of smart and capable people) isn’t already doing the same thing with obvious success. Often this is enough to write off the idea as a priori unworthy of consideration. Thus, for example, it can be safely concluded without further consideration that it’s an infeasible idea to try getting rich based on studying the publicly available information about billionaires, or to improve one’s investment strategy by studying the behavior of the stock market.
There are of course exceptions, but they’re very few and far between, so one should embark on a project that contradicts this principle only if there is some very good indication that it might be an exceptional situation. (For example, it might be that the idea really is too clever to have ever occurred to anyone, or there might be some systematic biases limiting its adoption, or it might be that everyone is in fact already doing it, only you’ve been oblivious about it so far. However, for most people, only the third thing is less than extremely rare.)
The principle is very general, in my opinion useful in a great multitude of cases and with a whole bunch of interesting implications. I’ll consider writing an article about it.
If it were possible to learn to how to get rich by studying people who had done so, this does not imply that it would be easy to get rich, or that people we can observe getting rich have obviously learned to do so in this way.
Figuring out how to synthesize the data is work.
Actually synthesizing the data, having figured out how do so, is work.
Implementing what you have learned to actually get rich is likely to be long-term, hard work.
Generally, the effecient market hypothesis does not imply that it is impossible to find opportunities to do work to create value. It implies that you are not likely to find opportunities to get much better than a typical return of value for work.
Generally, the effecient market hypothesis does not imply that it is impossible to find opportunities to do work to create value. It implies that you are not likely to find opportunities to get much better than a typical return of value for work.
I agree. In fact, the principle can be refined even further: you’re not likely to find opportunities much better than a typical career path accomplished by people whose abilities and qualities are comparable to yours. So if you think you’ve found a great opportunity, it’s not at all impossible that you’re correct, but it does mean that you’re either very lucky or exceptionally capable.
These points may seem trivial, but in reality, I’m baffled with how many people don’t seem to understand them. The most obvious example are all those people who keep insisting that they can beat the stock market, but I’ve seen many others too.
There are of course exceptions, but they’re very few and far between, so one should embark on a project that contradicts this principle only if there is some very good indication that it might be an exceptional situation. (For example, it might be that the idea really is too clever to have ever occurred to anyone, or there might be some systematic biases limiting its adoption, or it might be that everyone is in fact already doing it, only you’ve been oblivious about it so far. However, for most people, only the third thing is less than extremely rare.)
The factor I focus on when considering the potential for exception is money. If there was an exception would have given participants a way to get rich (or powerful or laid) then I assume that it would have been considered already. So I wouldn’t even bother looking at stock market ‘exceptions’, for example. I would look at medical ‘exceptions’ so long as the standard variant was the one with more financial success.
I think one very important principle you ignore here are the implications of what might be called the generalized weak efficient markets hypothesis. When it appears that DIY research based on publicly available information offers a potential for huge gains, the first thing one should ask oneself is why everyone (or at least a large number of smart and capable people) isn’t already doing the same thing with obvious success. Often this is enough to write off the idea as a priori unworthy of consideration. Thus, for example, it can be safely concluded without further consideration that it’s an infeasible idea to try getting rich based on studying the publicly available information about billionaires, or to improve one’s investment strategy by studying the behavior of the stock market.
There are of course exceptions, but they’re very few and far between, so one should embark on a project that contradicts this principle only if there is some very good indication that it might be an exceptional situation. (For example, it might be that the idea really is too clever to have ever occurred to anyone, or there might be some systematic biases limiting its adoption, or it might be that everyone is in fact already doing it, only you’ve been oblivious about it so far. However, for most people, only the third thing is less than extremely rare.)
The principle is very general, in my opinion useful in a great multitude of cases and with a whole bunch of interesting implications. I’ll consider writing an article about it.
If it were possible to learn to how to get rich by studying people who had done so, this does not imply that it would be easy to get rich, or that people we can observe getting rich have obviously learned to do so in this way.
Figuring out how to synthesize the data is work.
Actually synthesizing the data, having figured out how do so, is work.
Implementing what you have learned to actually get rich is likely to be long-term, hard work.
Generally, the effecient market hypothesis does not imply that it is impossible to find opportunities to do work to create value. It implies that you are not likely to find opportunities to get much better than a typical return of value for work.
JGWeissman:
I agree. In fact, the principle can be refined even further: you’re not likely to find opportunities much better than a typical career path accomplished by people whose abilities and qualities are comparable to yours. So if you think you’ve found a great opportunity, it’s not at all impossible that you’re correct, but it does mean that you’re either very lucky or exceptionally capable.
These points may seem trivial, but in reality, I’m baffled with how many people don’t seem to understand them. The most obvious example are all those people who keep insisting that they can beat the stock market, but I’ve seen many others too.
I agree with your general principle
The factor I focus on when considering the potential for exception is money. If there was an exception would have given participants a way to get rich (or powerful or laid) then I assume that it would have been considered already. So I wouldn’t even bother looking at stock market ‘exceptions’, for example. I would look at medical ‘exceptions’ so long as the standard variant was the one with more financial success.