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Old 11-25-2007, 10:41 AM
adios adios is offline
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Join Date: Sep 2002
Posts: 8,132
Default Re: Why Sklansky\'s idea should not work

You wrote in part:

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Now this guy is really good. His prices are close to perfect. Meaning that both buying and selling at his price will usually have a break even EV on the settlement date and cost you 5%. But he is not perfect. If he was, he would be unbeatable. But since he isn't, the colonists try to figure out a way to take his money. So what they do is establish contact with an earthling who DOES see stock quotes. Most of which, by the way, are quite similar to the Martian bookie's. But a few are not and when this happens the other Martians take the side that the quotes would indicate to. Either "buying" when the quote is higher or "shorting" when the quote is lower. If the bookie is indeed not perfect (and we bar super weird graphs regarding his skill) then this method will rate to beat him. That's my basic contention.

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seems to be the similar as what DesetCat wrote in his OP when he wrote:

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Now of course value investors only believe in a weak form of the Efficient Market Theory, where market prices are usually efficient, but not always.

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You continue with:

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BUT. Just to make things clear. Suppose the Martian bookie was a different guy who knew nothing about the market. Except unbeknownst to the other colonists, he had tapped in to someone who knew the market prices. And that was his "line". He would rate to beat his typical co colonists out of the 5% commission on average. And this time those colonists who could find out market quotes would be among those losers. BUT WAIT. Suppose that first bookie went home with his tail between his legs and the colonists now, ironically, instead of beating him with their knowledge of market prices, solicit him to help beat this second bookie who knows the market prices. When he agrees, the colonists now buy or short in the direction of the disgraced bookie and away from the market price of the second bookie. And they beat this second bookie EVEN WORSE.


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Hmmnm.... Interesting.

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You don't think Buffett would agree with all that?

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Don't know about the second part but maybe.
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