MIT Study: Random Investment As Good Or Better Than Traditional Financial Strategy

[Broke Wave]

you made a good post. HL isn't exactly the most active board on here.

about 2/3 of academic literature agrees with the "random walk" or efficient market hypothesis like mentioned in the MIT article posted above. about 1/3 agrees with you.

these trends you mention change as well. you ever heard of "dr. copper" as in demand for copper predicts economic growth? well that theory has been getting shytted on for the last couple years. these large macro-economic trends are hard to predict. and if you can predict them you should start your own company.

Hmm Quality over Quantity.. I think the academic "consensus" is split in some ways about neo-liberalism but I firmly believe it is incorrect... as an example to what we're talking about, if there was 100% consensus on something it wouldn't be worth discussing. Behavior economics in my view totally refutes random walk theory when examined on a historical level.

As far as the dr copper theory, that is actually a false co-relation. The relationship created by the macro trend must correspond with the growth of certain aspects of a specific industry or asset. The relationship cannot be incidental, for example the amount of rain in Spain and the dividend yield of mining stocks in Brazil. While they may be incidentally related in a chart, the subjective aspect of investment takes hold here... it is not a totally quantitative activity.

Nice to speak with someone who understands this stuff, you work in finance?

 

[Domingo Halliburton]

Hmm Quality over Quantity.. I think the academic "consensus" is split in some ways about neo-liberalism but I firmly believe it is incorrect... as an example to what we're talking about, if there was 100% consensus on something it wouldn't be worth discussing. Behavior economics in my view totally refutes random walk theory when examined on a historical level.

As far as the dr copper theory, that is actually a false co-relation. The relationship created by the macro trend must correspond with the growth of certain aspects of a specific industry or asset. The relationship cannot be incidental, for example the amount of rain in Spain and the dividend yield of mining stocks in Brazil. While they may be incidentally related in a chart, the subjective aspect of investment takes hold here... it is not a totally quantitative activity.

Nice to speak with someone who understands this stuff, you work in finance?

you'll never find consensus on economic issues, just look at this board when we start talking economics.

im not saying i totally agree with EMH. but look at performances of hedge funds or stock pickers.

88% Of Hedge Funds, 65% Of Mutual Funds Underperform Market In 2012

so with their hundreds of millions poured into research, the smart money still can't beat the market.

yeah i work for a smaller investment and retail firm.

 

[Broke Wave]

you'll never find consensus on economic issues, just look at this board when we start talking economics.

im not saying i totally agree with EMH. but look at performances of hedge funds or stock pickers.

so with their hundreds of millions poured into research, the smart money still can't beat the market.

yeah i work for a smaller investment and retail firm.

hedge funds are a scam... i think we both know that... but the profitability of the investment wings of firms like GS etc etc and some reputable retail investors overrides this.

you cant "beat" the market you can only "understand" the market, know what I'm trying to say?

 

[Domingo Halliburton]

hedge funds are a scam... i think we both know that... but the profitability of the investment wings of firms like GS etc etc and some reputable retail investors overrides this.

you cant "beat" the market you can only "understand" the market, know what I'm trying to say?

yeah i got you. the fees on hedge funds are outrageous. anyways there's a stock market thread that's a sticky at the top of this board you should pop in (maybe you have). it hasn't been real active but i've been meaning to post more.

 

[Robbie3000]

It says in my finance book that the markets are essentially random

That's the first thing my finance teacher in college told me.

 

[Kid McNamara]

Meanwhile, an investment banker just made another million.