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Comment by GuB-42 | Hacker News Reader

- Luck

- Get the best information, possibly insider

- Manipulate the market

- Not get caught doing these things

The strategies described in the article are strikingly similar to gambling advise. Applying these in a casino will minimize your chances of ending up broke, but you will still lose money in the long run, because of the house edge. I'd say it is the same thing with investment, if you follow these rules, you will mostly end up with reasonable market-rate returns. But to be really good, you don't just need a good betting strategy, you also need the house edge.

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Like with gambling or startups, out of every 1000, maybe 1 will make it big; out of those, a fraction will choose to become famous / a known name, and that's the survivorship bias that gets thousands more amateur investors to try their hand and get rich quick, turning their life savings into another fraction of a percentage of these top investors' accounts.

For most of us regular people, slow and safe investments are the way to go. Get savings, get some interest on that to at least partially counteract inflation, buy a house, avoid debts, loans and subscriptions as much as you can. And I'm aware that all that sane money management advice isn't even an option for a lot of people.

Plenty of evidence contradicts the efficient market hypothesis, showing that it's possible to outperform the average. The market's late response to Covid is a case in point.

The gambling analogy holds up only when you compare it to poker or sports betting, where you can make money if you're better than others.

Poker - sure. But sports betting?

Yes, e.g. https://www.cbsnews.com/news/sports-bettor-billy-walters-win...

"Over a period of 39 years, Walters had only one losing year, with a 30-year winning streak"

> Plenty of evidence contradicts the efficient market hypothesis

name some.

I think the market is quite close to, but not perfect. There's _some_ places where you can eck out an edge, but it's very slight.

Nobody is lucky for as long as Berkshire Hathaway has been successfully doing this.

Sure, that's why there are three more items on the list.

If that is the metric then the best investors are not passive stock picking investors, they run businesses and hammer out deals. Which in some sense just make them the best (or among the best) corporations.

Your comment sounds cynical but I totally agree with you. As a long time (now ex) trader I can tell you that the professionals have a tremendous information advantage over the retail investor. And even then they don't make money consistently. Edge is everything.

Regarding insider info, I apply the cockroach theory: there's never just one. You see the SEC bring insider trading charges all the time. This is probably a fraction of what really goes on in the markets.

> the professionals have a tremendous information advantage over the retail investor.

but do these traders beat the market on average though?

> if you follow these rules, you will mostly end up with reasonable market-rate returns.

which is good enough. You do not need to have outsized returns.

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