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Technology Stocks : Wind River going up, up, up! -- Ignore unavailable to you. Want to Upgrade?

To: Snowshoe who wrote (2537)	12/17/1997 12:54:00 PM
From: Allen Benn	Respond to of 10309

I read the Wall Street Journal article John and you referenced, and I recommend it to everyone on the thread. BNP/Cooper Neff Advisors trades millions of shares annually using almost totally dependent on a Black Box. 1. While the model has produced positive returns, at a much-reduced level of "risk", the school is out on its efficacy. Also, explicit in the article is the recognition of the importance of high-volume, low-transaction cost trades. By high, I mean extremely high, mountains past what an individual investor could possibly undertake. For the model to produce 23% return over 13 months in one fund during recent Bull market is not convincing. 2. Beating the market mechanically is getting harder and harder, as millions of investors scour the data for inefficiencies. 3. It appears that a lot of what their black box does is arbitrage, which is made to order for a mechanical approach. I certainly didn't mean to include arbitrage when I questioned mechanical investing. 4. Mr. Sterge's views on the uselessness of fundamental information for picking stocks, applies ONLY to his worldview focused entirely on minute-to-minute trading. He says a stock's economic value is irrelevant to the market, but he only knows the short-term trading market. I agree with his assessment that short-term price movement is not tied to fundamentals. However, I say fundamental interpretation of economic value is the only thing that affects stock price in the long-term. He doesn't look at the long-term. My overall interpretation of the article is that mechanical trading is either very, very tough or impossible. (You should understand that I am genetically biased toward wanting to trade mechanically. I have trouble believing I can't develop a highly profitable mechanical approach.) Allen