Comment by elliptic | Hacker News Reader

Comment by elliptic | Hacker News Reader

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It is difficult to imagine what sort of evidence will convince you. All sorts of behavior is possible under all sorts of unrealistic models.

I'd also like to note the irony of your snarky comment about wishing that those who disagree with you ought to study some math, given the background of managers like Jim Simons.

Edit: > First, he didn't beat the market average 227 times in a row -- for most of those periods, he didn't lose money, but then a buy & hold investor also didn't lose money. A meaningful comparison would have to compare his outcomes with that for a buy & hold investor riding the ascending market value by holding a boring, geriatric index fund

The stock market rose by about 8 or 9% annually during that time. Dismissing his 227 positive months requires absurd contortions, like positing that his firm would invest in the stock market or t-bills for 11 months out of the year, and then make a series of large bets in the remaining month. Given that he made, I believe, 10k bets a year, the disparity in bet size must be massive to even come close to supporting your hypothesis.

> It is difficult to imagine what sort of evidence will convince you.

What are you talking about? There is no evidence for the assumption, and the only reliable evidence stands against it, like the WSJ Dartboard Contest.

If a particular institution does better than the averages, the most likely explanation is chance, and no other explanation has anything resembling scientific evidence. And the Dartboard Contest demonstrates that, when called on to put up or shut up, the professionals weren't able to put up.

> The stock market rose by about 8 or 9% annually during that time. Dismissing his 227 positive months requires absurd contortions ...

No, it requires acknowledging that the market rose by 8 or 9% per annum, as you just pointed out. His performance needs to be compared to the market averages, not to a hypothetical flat market. I can see you're not getting this -- someone says, "I must be a stock genius, because I never saw zero or negative growth in my portfolio." Someone then deflatingly points out, "Neither did the average market, the holdings of retired, risk-averse investors in Ohio."

> ... to even come close to supporting your hypothesis.

It is not my hypothesis, it is the default assumption of people with scientific training -- if there is no evidence, there is no effect. And there is no evidence.

In a pool of ten million investors, a handful will show spectacular performance by chance alone -- this is a mathematical fact -- and those individuals would have to be saints to avoid assuming and claiming they're stock picking geniuses.

Occam's razor is a precept that says the simplest explanation tends to be the right one. The simplest explanation is that some investors come out ahead because of chance. This means the burden of evidence rests with those who would like to claim that stock market performances arise from "secrets of the winners".

That would be you.

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