Hacker News Reader

Comment by throw101010 | Hacker News Reader

I'm wondering, as I read this over and over again about random picks performing as well or even better than professionals in the field, how come we never see rigorous scientifc studies about this for various timescales?

If we could really attribute this task to randomness wouldn't this save a lof of money to financial institutions considering how much the same people earn for these tasks?

View on HN

This is what "whole market funds" or "S&P 500 funds" are all about. No stock picking, other than identifying some pre-existing known set of stocks, and just investing in them without discrimination or effort. They have become quite popular over the last 15 years as the "random walk down wall st" idea has spread within (US) culture.

I have read, and heard from multiple financial professionals, that these work best in low interest rate bull markets, and are more likely to underperform active management strategies in more turbulent and difficult financial environments, such as the one we are entering.

The phase you're looking for is tax loss harvesting. A good money manager on a good fund will be able to take advantage of that in a down market, leading you to greater riches when there's a bull market. You can do it yourself, but you can also pay a professional to do that work for you, hence the fees on a given fund.

> I'm wondering, as I read this over and over again about random picks performing as well or even better than professionals in the field, how come we never see rigorous scientifc studies about this for various timescales?

Erm, Kahnemann got a Nobel price in economy for his work with Amos Tversky over a decade which this was a part of. I am not sure what you need here, do you need a list of papers by Kahnemann and Tversky? With Terry Odean thrown in for good measure? I am not sure who the "we" are here who do not see these papers but they do exist.

It's more profitable to sell hope

People are willing to pay a premium for good marketing and an air of superiority.

Reply on news.ycombinator.com