Mama Bear,
The future is always unpredictable, long term or short term. W/o going into the details of stochastic processes, I suspect that the reason you find short term positions more predictable than long term ones is because of time and volatility interactions. The magnitude of the differences between predicted value and actual value is smaller short term than long term, because of drift. But, taken as a percentage of the change, the differences should be comparable. (Michael Bakunin, this is a very general statement and not quite mathematically accurate, and I know that. :-))
For example, with DELL at 45, you may predict DELL to be at 46 an hour from now and it ends up at 46 1/4; while you may predict DELL to be at 55 a month from now and it ends up at 58 (wishful thinking on my part, huh!? :-)). The differences in absolute terms are smaller in the short term case, but taken as a percentage of the actual change (1/4 out of 1 1/4 vs. 3 out of 13) are comparable.
Also, new information often gets incorporated in the price over longer terms.
I have no comments about the mutual fund industry's practices. I personally find them unattractive and do not invest in actively managed mutual funds.
-BGR. |
