Late to the party here, but I thought I’d share my experience in case it is helpful data to anyone. I’ve been dumb luck, the clear eyed-fool, and the chosen one at different points. Here’s what it felt like internally: Dumb luck— What I said: “I haven’t tested for statistical significance yet, but the correlation is just so dang uncanny. I’m looking into how I can test if it’s actually significant, but I’m hopeful that I’ve actually stumbled on to something.” The situation: I had only conjectures for how I was achieving success, but nothing solid or obvious. My choices and timing were extraordinarily bad, and I was hopeful that I had found a way to consistently underperform the market and that I could have someone short my choices with significantly larger capital. Aftermath: Over the next 2 years I made it all back and ended up ahead of the market, basically killing my hope of having some sort of intuitive edge for good.
Clear-eyed fool— What I said: “I believe the EMH. I still invest more in some stocks I like, because if true, the EMH implies that I won’t get worse returns, so my only loss is a slightly higher return variance, which is pretty small, given that they represent small portions of my total wealth.” The situation: I was no longer actively trading and I was putting new money into index funds, but let myself keep my previous intuitive decisions. The aftermath: They basically kept up with the market if you exclude NVDA, which pulled up my average.
Chosen-one (2x) - What I said 1: “Ok, well the EMH obviously doesn’t apply here. And I’m not getting rich off it, but I’ll take the extra money.” 2: “I’m not saying that I know better than anyone else, but I’m just looking at this and it looks really solid to me. I’m just surprised that this isn’t already corrected.” The situations: 1. I decided to buy individual stocks as a tax optimization strategy. Specifically pairing it with donating appreciated stock, you can get a decent tax advantage from individual stocks over index funds. 2: I was making bets on a small betting site. The aftermath: 1. I pay less in taxes and donate more to effective causes. 2. Not crazy piles of money, but more than my day job.
Late to the party here, but I thought I’d share my experience in case it is helpful data to anyone. I’ve been dumb luck, the clear eyed-fool, and the chosen one at different points. Here’s what it felt like internally:
Dumb luck—
What I said: “I haven’t tested for statistical significance yet, but the correlation is just so dang uncanny. I’m looking into how I can test if it’s actually significant, but I’m hopeful that I’ve actually stumbled on to something.”
The situation: I had only conjectures for how I was achieving success, but nothing solid or obvious. My choices and timing were extraordinarily bad, and I was hopeful that I had found a way to consistently underperform the market and that I could have someone short my choices with significantly larger capital.
Aftermath: Over the next 2 years I made it all back and ended up ahead of the market, basically killing my hope of having some sort of intuitive edge for good.
Clear-eyed fool—
What I said: “I believe the EMH. I still invest more in some stocks I like, because if true, the EMH implies that I won’t get worse returns, so my only loss is a slightly higher return variance, which is pretty small, given that they represent small portions of my total wealth.”
The situation: I was no longer actively trading and I was putting new money into index funds, but let myself keep my previous intuitive decisions.
The aftermath: They basically kept up with the market if you exclude NVDA, which pulled up my average.
Chosen-one (2x) -
What I said 1: “Ok, well the EMH obviously doesn’t apply here. And I’m not getting rich off it, but I’ll take the extra money.” 2: “I’m not saying that I know better than anyone else, but I’m just looking at this and it looks really solid to me. I’m just surprised that this isn’t already corrected.”
The situations: 1. I decided to buy individual stocks as a tax optimization strategy. Specifically pairing it with donating appreciated stock, you can get a decent tax advantage from individual stocks over index funds. 2: I was making bets on a small betting site.
The aftermath: 1. I pay less in taxes and donate more to effective causes. 2. Not crazy piles of money, but more than my day job.