← Back to context

Comment by bongodongobob

2 months ago

If the gains are huge, it's either temporary luck or they're cheating. You cannot have long term high alpha without either. If you meet a person who can constantly flip a coin heads side up, ask them to keep going and they'll either fail or you'll find the coin is rigged.

6 comments

bongodongobob

Reply
anon7725  2 months ago

“It’s impossible for me to beat the market consistently” does not imply “nobody can beat the market consistently” or “nobody can beat the market consistently for a long enough time to become filthy rich”.

  • caminante  2 months ago

    The N=1 or handful of people that are your exception kind of prove the rule.

    Here's the thing...if you want to be pedantic, you need to explain how someone persists such alpha over time with examples. Not easy.

    edit: See my note below on RenTech.

    • anon7725  2 months ago

      I would think that the ways that people generate consistent alpha would include scale advantages, information asymmetry, execution advantages, geographical advantages and a strategic edge. Usually some combination of those factors.

      Someone like Warren Buffet has a once in a generation skill combined with massive scale and information advantage (he sees deals in publicly-traded stocks before anyone else). You may claim that it’s not fair to cite Buffet here, but he’s just the most public example of market actors with a durable advantage.

      1 reply →