skill and luck
This thread seems to have rambled off a little. But to some recent points:
Duke, that is very interesting that the CPC code bans back-testing of products, but does not extend this to the underlying indices/strategies. That’s a rather large loophole for the regulator to have left. One product providers would be silly not to exploit.
Ecstatic, to your point about skill and luck; Poker most definitely is a game of skill as you say. But, like fund management, it also involves luck. And the paradox of luck is that in highly skilled environments, luck plays an even larger role. So I can quite confidently say, that at the final table of the world series of poker, the ultimate winner will be the luckiest at the table (a statement which in no way detracts from the skill of any of the players at the table).
I don’t understand your martingale point about roulette. If you are suggesting doubling your bet in the expectation of eventual pay out, the existence of white (and double white on some wheels) plus table maximum bets makes this a very dangerous ‘strategy’. Likewise for blackjack, table maximums prevent this strategy working.
As to the various posts regarding the efficacy of trend following investment strategies. I am not sure if we could reconcile our investment philosophies. You appear to concentrate on trading of individual commodity futures, something I would consider to be closer to speculation than investment (which involves ownership of some underlying asset for a period of time long enough for fundamental value to reveal itself). Like the croupier at the casino’s poker table, the only long term winner at this game will be the market maker, those taking a consistent slice of the overall action. That is not to suggest you will not make money, but as Marc points out, there is no way for me to tell in advance whether that successful person will be you or someone else at the table.
To go back to the original point of this thread, which was the spurious causation drawn between simulated investment strategies and wonderful investment outcomes. An investor must ask him/herself if the investment proposition makes sense. You will never convince me that frequent trading of commodity futures is something at which I can consistently make money. Equally I remain unconvinced about the prospects for an algorithm which dictates when to buy ‘risk on’ assets and sell ‘risk off’ assets (admittedly a very basic summation of the BNP strategy within the Dolmen safe harbour product).
I am unconvinced. That is not to say it won't work. This product may be bailed out by a large dose of luck. But intelligent investing, recognising the role of luck in the eventual outcome, attempts to reduce its importance.
The idea that anyone can make money consistently trading markets is a fiction convenient only to stock broking and spread betting firms. Stock brokers and their ilk are in the main, profitable after all.
This thread seems to have rambled off a little. But to some recent points:
Duke, that is very interesting that the CPC code bans back-testing of products, but does not extend this to the underlying indices/strategies. That’s a rather large loophole for the regulator to have left. One product providers would be silly not to exploit.
Ecstatic, to your point about skill and luck; Poker most definitely is a game of skill as you say. But, like fund management, it also involves luck. And the paradox of luck is that in highly skilled environments, luck plays an even larger role. So I can quite confidently say, that at the final table of the world series of poker, the ultimate winner will be the luckiest at the table (a statement which in no way detracts from the skill of any of the players at the table).
I don’t understand your martingale point about roulette. If you are suggesting doubling your bet in the expectation of eventual pay out, the existence of white (and double white on some wheels) plus table maximum bets makes this a very dangerous ‘strategy’. Likewise for blackjack, table maximums prevent this strategy working.
As to the various posts regarding the efficacy of trend following investment strategies. I am not sure if we could reconcile our investment philosophies. You appear to concentrate on trading of individual commodity futures, something I would consider to be closer to speculation than investment (which involves ownership of some underlying asset for a period of time long enough for fundamental value to reveal itself). Like the croupier at the casino’s poker table, the only long term winner at this game will be the market maker, those taking a consistent slice of the overall action. That is not to suggest you will not make money, but as Marc points out, there is no way for me to tell in advance whether that successful person will be you or someone else at the table.
To go back to the original point of this thread, which was the spurious causation drawn between simulated investment strategies and wonderful investment outcomes. An investor must ask him/herself if the investment proposition makes sense. You will never convince me that frequent trading of commodity futures is something at which I can consistently make money. Equally I remain unconvinced about the prospects for an algorithm which dictates when to buy ‘risk on’ assets and sell ‘risk off’ assets (admittedly a very basic summation of the BNP strategy within the Dolmen safe harbour product).
I am unconvinced. That is not to say it won't work. This product may be bailed out by a large dose of luck. But intelligent investing, recognising the role of luck in the eventual outcome, attempts to reduce its importance.
The idea that anyone can make money consistently trading markets is a fiction convenient only to stock broking and spread betting firms. Stock brokers and their ilk are in the main, profitable after all.
