Re: Derivative Premium Arbitrage
[ QUOTE ]
I agree with you that few investors can beat the market. I think your other point was that you need more than a computer to do this? That's what I'm disagreeing with. It seems like a pretty ignorant comment on your part, so I think it's more of a case of me misunderstanding you rather than you believing that.
[/ QUOTE ]
Is this the phrase you take issue with? [ QUOTE ]
If you have some extraordinary ability to evaluate expected return and risk more accurately than the market, good for you.
[/ QUOTE ]
I'm not sure I imply that computers are at all necessary to do well in the stock market. Someone could have easily said what I said in 1925, although it would have been less true then.
Or do you take issue with this: [ QUOTE ]
Any of your own research you sit and do from your computer will be essentially worthless. You won't gain anything, and you won't lose anything. Your expected return will be exactly the same.
[/ QUOTE ] This is like saying "any amount of research you do on your computer to solve an unproven topology theorem will be pretty much worthless." You've got to be absurdly talented to have any chance. If someone isn't smart enough to beat the market, they'll sit there all day and look at information other people already know and get nothing out of it, besides a wealth of information that has already been reflected in market prices.
The normal investor who doesn't have take time or effort, or the necessary insight or talent, is much MUCH better off just investing in indexes and letting the cut-throat investors determine market prices once you consider the value of time and effort.
If you enjoy choosing stocks carefully and think you might have a very small edge or some insight that isn't reflected in market prices, then by all means, study away.
If it was the last statement about arbitrage, well, you quite frankly DO need a computer to take substantial advantage of arbitrage opportunities in any sort of developed-world exchange.
|