Timeline for How can I determine if my stock picking performance was due to luck or due to skill?
Current License: CC BY-SA 4.0
10 events
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| Jun 20, 2020 at 19:45 | comment | added | SafeFastExpressive | @SwissFrank Beta is not leverage, the fact that you confuse the two is proof of how weak your grasp of these topics are. You haven't explained how a year can't be a trial or what the trials should be. Irregardless you can't refute that Buffett's results so far exceed the markets that they can never be explained by chance. | |
| Jun 20, 2020 at 15:11 | comment | added | Swiss Frank | @SafeFastExpressive, you show no understanding of this topic at all. You continue to assume one year = one trial, despite my explanation that it's not necessarily so, and yet you haven't rebutted my explanation either. You claim there's no leverage, and yet I've already mentioned beta as an example of leverage, and you don't explain why it doesn't apply. (Specifically you'd need to show all Buffett's investments were at or below beta=1.) I can't take any more time with this as you don't seem interested in learning anything. Best of luck! | |
| Jun 18, 2020 at 21:35 | comment | added | SafeFastExpressive | @SwissFrank Again, read the essay SuperInvestors of Graham-Doddsvile, it's available on the internet from Columbia University. Try to debunk that. | |
| Jun 18, 2020 at 21:34 | comment | added | SafeFastExpressive | @SwissFrank Again, you've got a lot to learn about Buffett. Beating the market 39 of 40 years by luck is one in 27.5 Billion attempts. Beating the market by 15% a year for 40 years by luck is one in trillions. That 40 years included dozens of bull markets & bear markets, bubbles, inflation & deflation. He invested in massively diverse sets of companies including penny stocks, liquidations, growth companies, financial companies, insurance, transportation, energy etc, etc. Leverage? None. Pool Size? Not billions or trillions. If you can't accept Buffett as proof, you can't accept anything. | |
| Jun 18, 2020 at 10:20 | comment | added | Swiss Frank | massive outperformance for the first 40 years shows how the market can be beat by using fundamental analysis Sigh, no it doesn't. The first question to ask is how many trials there are. And if someone likes only a certain type of stock, and there's a long era in which that certain type of stock is the right stock to be in, then separate years or separate positions are not separate trials. Maybe the 40 years might all be one_ trial. Second question is how leveraged he was, such as by the firms' beta. Third question is how many investors we have in our pool: what are odds one does well? | |
| Jun 17, 2020 at 22:49 | comment | added | SafeFastExpressive | @SwissFrank Buffett's massive outperformance for the first 40 years shows how the market can be beat by using fundamental analysis, by someone with the right psychological temperament. That's clearly a rare combo, which is what I tried to allude to in my answer. It's not just that Buffett is never spooked by market crashes, he does a lot to limit psychological biases in his analysis. For example, when researching a company, he won't look at it's stock price until his value estimation is done, so if he falls in love with a business he can't use it's price as a target to justify buying it. | |
| Jun 17, 2020 at 20:15 | comment | added | nanoman | @SwissFrank Illegal insider trading has a pretty good track record of producing excess returns, which is why it's so tempting. There's a difference between being certain of an outcome and having a better estimate than the public does of the probability of the outcome -- the latter is enough to reliably make lots of money over time with appropriate bets. It's not true that just because insiders have uncertainty, they don't have an advantage. Likewise for legal trading by someone with unusual talent for analyzing the probability implications of public information. | |
| Jun 17, 2020 at 13:55 | comment | added | Swiss Frank | I don't think so, but say you're right. Not even insiders at a company know enough about their own company, vis a vis the competition, to know how to invest. Say you worked at UBS, knew they had a new brokerage ad blitz prepared, got a new job at archrival Credit Suisse, and saw their brokerage business ad budget was being cut back. Do you know who will outperform? Maybe UBS spends too much on ads, letting CS win. Maybe UBS buries CS. Or a brokerage price war drives commissions to 0! Or prop trading makes billions at CS. If the insider can't know, you won't know based on public info. | |
| Jun 13, 2020 at 23:21 | history | edited | SafeFastExpressive | CC BY-SA 4.0 |
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| Jun 13, 2020 at 23:13 | history | answered | SafeFastExpressive | CC BY-SA 4.0 |