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Technology Stocks : All About Sun Microsystems -- Ignore unavailable to you. Want to Upgrade?

To: JC Jaros who wrote (25745)	1/6/2000 12:15:00 AM
From: fuzzymath	Read Replies (1) \| Respond to of 64865

JC, if 52% of market gains occur on Wednesdays, we're all rich! Extreme market inefficiencies are the easiest way possible to get rich. Here are some examples of what could be done in your example case. Say we have $100K. At the close on each Tuesday, buy $200K of stocks (using margin). Sell all at the close each Wednesday. Keep the $100K in cash the rest of the week. Your return: 104% of the stock market's return plus 6/7 of the cash interest rate. You beat the market with a mere 40% exposure to the market, so your risk-adjusted return is more than 250% times that of the market. Super strategy! This is similar to my conservative models (models #3 & #4 for example), except that my models beat the market with just 20% market exposure. Now, say you don't mind an average 100% participation in the stock market. Then, on Wednesdays you use futures to control $500K of market index using your $100K of cash. The other days you stay in cash. Now your return is 260% of the stock market's return, plus 6/7 of the cash interest rate. For no greater risk (your average stock market exposure is 100%), you've almost tripled the return you'd get using a buy and hold strategy. This is similar to my aggressive models (#9AGGR and #17 for example). The point is, JC, that market inefficiencies, if identified and understood by a limited number of investors, can produce huge gains at very little risk. This is exactly what my methods are all about. So, I congratulate you for figuring out what I've been doing, in essence. You're wrong if you think market inefficiencies do not yield a winning strategy. Finding these pockets of inefficiency is very profitable. Have you ever gone to my site? You talk as though you think it's all impossible. My current "portfolio" is the NYSE index, that's what I compete against. And I whip it in risk-adjusted terms with every model I post (how would it ever make sense to post a model that didn't beat the buy-and-hold strategy?). JC, I've put over 15,000 hours into this, and I'm a pretty smart physics/math dude. And much of my professional work in the past 20 years has involved development of pattern-recognition algorithms. I'm not joking when I say I've found something that substantially beats the market and also avoids the dips. Chimps would probably work decently (the Wall Street Journal dartboard has a pretty good record, after all). But that's not good enough for me. Kevin