not once did I use the words 'trade' or 'trading'. That whole concept in this conversation is all yours. I mentioned working volatility is advantageous if worked properly.
How does one "work volatility" without trading? If there is a way, please sign me up.
you feel this way then I can see why you think DD, analyzing and studying the market is useless.
I never said DD is useless. I just think attempting to predict (for profit) short-term price movements of individual securities, or sets of them, is useless.
Can you show me one person, or system, or piece of software, that can predict price movements better than the simple (and open-ended) formula that stock prices move in a long term 12% upward trend, with volatility equal to their betas?
These are what make up the sources of what you call "informational advantage".
Perhaps. But I have yet to see anyone (who does not have a direct hand in moving markets) bring to the table an informational advantage on short-term stock price movements. Exactly what kind of informational advantage do you have on these stock price movements? To put it more bluntly, how do you predict when people will buy and sell? And do you really think that your information is so exclusive to you that it hasn't been factored into prices already?
I will tell you a little bit about my brand of DD. I don't claim to be able to predict valuation cycles or the market in general. But I do think I have some informational/analytical advantage when it comes to analyzing long-term business trends. Again speaking bluntly, I think I'm smarter, better-read, better-informed, and more imaginative than the average investor. I think this creates for me opportunities when I recognize long-term business possibilities that the market at large is unable to recognize. It also causes me to discard "opportunities" that the market seems to love -- I have never invested in a dotcom, even though (or because?) I've been using the internet since around 1990.
This is the informational advantage I bring to the table. It is slight, and only works sometimes, but that's enough for me. I claim that I can recognize some situations when the future prospects of certain companies are under- or over- estimated by the market at large. And really, that's all that I need to make my moves.
Figuring out how investors make their decisions is a good deal of what stock market analysis is all about.
Yes, in the same way that figuring out next week's numbers is what playing the lottery is all about. Can you really figure out people's future investment decisions? I don't even know my own future investment decisions; how can I know others'?
>No predictive mechanism, system, or person has ever >shown efficacy greater than zero.
Garbage!
When you have a chance, take a look at "A Random Walk Down Wall Street" by Burton Malkiel, and/or "Where are the Customers' Yachts?" by Fred Schwed.
I can predict that Ntap will go up in the next month or two. If I am right have I shown an efficacy greater than zero?
First of all, you haven't yet predicted anything. What does "go up in the next month or two" mean? That there will be at least one uptick on NTAP in the next 60 days? That the closing price 60 days from now will be above today's closing price? Or what? Predictions are no good if they're this vague -- and vagueness is of course the trade of many market pundits. State your prediction in a precise way.
BTW, predicting that a stock will eventually go up is not much of an accomplishment. Stocks do generally go up, not down. It's kind of like me saying "NTAP will sell some product next quarter" and expecting to be rewarded as a brilliant visionary of their business prospects. Read anything by Karl Popper, and you'll find out that a prediction should have some surprise value in order to be valuable. If your prediction encapsulates what everyone knows to be true anyway, then you're not really adding anything to the conversation.
You make every investment using your predictive capabilities
Yes. I know that placing my money in blue-chip technology stocks for the next 50 years beats placing it in a savings account. This is all I claim to be able to predict, and it has little surprise value.
Dangerously huh? Sorry - didn't mean to write anything dangerous.
No danger to me; it's your own money you're betting.
Best regards to all. |
