The Federal Reserve: Love it or Hate it

[Zygote]

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All that link 'establishes" is that someone else besides mises likes to theorize all kinds of things that are theoretially possible but which data from the real world shows doesn't happen.

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Are you gonna show some real data that investors have not made money in the long run beyond random luck or do we still have to stick with your word?

[Copernicus]

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All that link 'establishes" is that someone else besides mises likes to theorize all kinds of things that are theoretially possible but which data from the real world shows doesn't happen.

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Are you gonna show some real data that investors have not made money in the long run beyond random luck or do we still have to stick with your word?

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If by your question you are shortcutting what I actually said (large professional investors that are tracked by investment managers do not show excess returns for 3 consecutive periods), my particular sources are proprietary to my clients. If I get bored I'll search for something similar online, which you could as well, unless your a googletard. However, I assume your just being adversarial, since that the lack of consistent success of PIMs is accepted in investment circles.

[Zygote]

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If I get bored I'll search for it online, which you could as well, unless your a googletard

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why would i look for a study that the sun doesnt rise if im not the one making the extraordinary claim?

Ive got better things to do. However, if you want to show your point and bring some evidence to back this up, then i'll definitely look at this.

I just found it ironic that you go as far as saying the article has nothing to do with the real world and audaciously asked for a citation when you've provided nothing of the sort yourself even when asked of you. You have no theory or empiricism on your side.

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I actually said (large professional investors that are tracked by investment managers)

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(large professional investors that are tracked by investment managers do not show excess returns for 3 consecutive periods)

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didnt you bring this up to say that i couldnt make money in the market? You said my past predictions of gold were all dumb luck and my future predictions deserve no worth because of that?

"
it has to do with your inference that the run up in gold the last few years was somehow predictable and a "good investment" a priori. When you continually throw darts at a dart board you'll eventually hit the bulls eye. That doesnt mean your aim has gotten any better."

"
Once again the issue isnt whether it is speculation, its whether you can speculate profitably. Hedged investing and indexed investing with long timr horizons have proven to be profitable...one that requires expertise, and one that doesnt. Naked commodities investing, market timing, fundamental analysis etc have demonstrated for decades that they are not profitable"

"after transaction costs and over the long term yes. Im not the one saying it, decades of tracking investment professionals says it"



- Copernicus

[Copernicus]

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If I get bored I'll search for it online, which you could as well, unless your a googletard

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why would i look for a study that the sun doesnt rise if im not the one making the extraordinary claim?

Ive got better things to do. However, if you want to show your point and bring some evidence to back this up, then i'll definitely look at this.

I just found it ironic that you go as far as saying the article has nothing to do with the real world and audaciously asked for a citation when you've provided nothing of the sort yourself even when asked of you. You have no theory or empiricism on your side.

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I actually said (large professional investors that are tracked by investment managers)

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didnt you bring this up to say that i couldnt make money in the market? You said my past predictions of gold were all dumb luck and my future predictions deserve no worth because of that?

"
it has to do with your inference that the run up in gold the last few years was somehow predictable and a "good investment" a priori. When you continually throw darts at a dart board you'll eventually hit the bulls eye. That doesnt mean your aim has gotten any better." - Copernicus

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Unless you have knowledge or abilities the market doesnt have it should be obvious that you can't consistently beat the market. Except for transaction costs and real increases in the value of the market (eg productivity gains increasing the real net worth of all companies) it is a zero sum game where you have no edge. Gold is clearly not something that has underlying value growth driving increases in price. In fact, if anything, gold has underlying value decreases built in which make a negative sum game. Gold was artificially scarce at the point when it was delinked from currencies because world wide Treasuries had vast stores of gold that were unavailable to the market, and they instituted standards to limit sales of gold to avoid market shock. The claims that central banks are "dumping" gold to keep the price depressed is another use of a perjorative term that inaccurately describes the process. They have shown restraint to avoid "dumping" for the same reason the Chinese would be cutting their own throats for dumping US Treasuries.

[Zygote]

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Unless you have knowledge or abilities the market doesnt have it should be obvious that you can't consistently beat the market.



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Already answered this:

"What you seem to mis-understanding is just because some in the market realize the same information i do doesnt mean things arent mis-priced. If more people are putting money against the information than for it there still exists opportunity to make money. This happens often for a variety of reasons. I dont see how you deny it. You seem to think every long term profitable investor was just lucky besides those in index funds or fully hedged positions? "

"Again, just because other people know the likely eventual path of a currency doesnt mean they will outnumber those who put their money against this. Some market participants/manipulators, like China, buy securities for political reasons which is one reason why there are +ev bet available, for example. "

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Except for transaction costs and real increases in the value of the market

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Gold is clearly not something that has underlying value growth driving increases in price.

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So increases in the gold market are fake value? Gold has monetary, industrial and fashion value but this is all fake why?

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In fact, if anything, gold has underlying value decreases built in which make a negative sum game.

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i have no idea what you're talking about here.

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Gold was artificially scarce at the point when it was delinked from currencies because world wide Treasuries had vast stores of gold that were unavailable to the market, and they instituted standards to limit sales of gold to avoid market shock.

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This would be a long discussion. If you insist i'll get into it.

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The claims that central banks are "dumping" gold to keep the price depressed is another use of a perjorative term that inaccurately describes the process. They have shown restraint to avoid "dumping" for the same reason the Chinese would be cutting their own throats for dumping US Treasuries.

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Central banks sell, hold buy their gold or any other asset for many reasons. There can be arguments made for a lot of things and this discussion is not clear cut and probably long. Again, if you insist we can go there though.

[Copernicus]

I have no desire to get into long discussions with you because you have clearly demonstrated the lack of ability to provide anything of value.

I'll take the short one and leave it at that:

"So increases in the gold market are fake value? Gold has monetary, industrial and fashion value but this is all fake why?"

You have once again demonstrated your lack of reading comprehension or intentional distortion of what I said. NOTHING that I said can be construed as claiming gold has "fake value". What I did say is that there is nothing to drive underlying value GROWTH. Gold is a commodity and as such can only have underlying growth in value from new applications that make it significantly more scarce. Unless scarcity increases any fluctuation in price is speculation without foundation.

[DcifrThs]

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All that link 'establishes" is that someone else besides mises likes to theorize all kinds of things that are theoretially possible but which data from the real world shows doesn't happen.

[/ QUOTE ]

Are you gonna show some real data that investors have not made money in the long run beyond random luck or do we still have to stick with your word?

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The return streams of Renaissance, Bridgewater, AQR, SAC, George Soros, Warren Buffet etc.

they have all CRUSHED the markets for very long periods of time. in all these cases it is virtually indisputable that it isn't based on luck alone. the processes these managers have are solid and for every 5-10 year period of all of them they have generated information ratios (excess returns/std. deviation) of over 1.0 (i.e. for every unit of risk, they generated 1 unit of return. that is extremely impressive). markets are definitely beatable. it is ahrd to do it but it can very clearly be done. this is provable in the abstract without this data also since efficiency stems from the rationality of the participants and all participants are not rational, do not have similar time horizons, do not have similar risk aversions, and do not all do the same level of research.

some participants aren't allowed to do some things while other can do far more (i.e. some managers aren't allowed to short stocks while some only have 50% symmetric leeway (i.e. can only be long or short 50% rather than 100% vs. their benchmark)

if you can identify clear areas where there are irrational bets being made, then you can generate returns not based on luck alone.

i don't really think that much can be up for debate.

Barron

[Zygote]

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The return streams of Renaissance, Bridgewater, AQR, SAC, George Soros, Warren Buffet etc.

they have all CRUSHED the markets for very long periods of time. in all these cases it is virtually indisputable that it isn't based on luck alone. the processes these managers have are solid and for every 5-10 year period of all of them they have generated information ratios (excess returns/std. deviation) of over 1.0 (i.e. for every unit of risk, they generated 1 unit of return. that is extremely impressive). markets are definitely beatable. it is ahrd to do it but it can very clearly be done. this is provable in the abstract without this data also since efficiency stems from the rationality of the participants and all participants are not rational, do not have similar time horizons, do not have similar risk aversions, and do not all do the same level of research.

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If Copernicus would/will concede this much i would be more than satisfied. As of now he seems to believe society is just throwing darts and they are the outliers that arrive by pure luck through an adequate sample size.

[Copernicus]

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
All that link 'establishes" is that someone else besides mises likes to theorize all kinds of things that are theoretially possible but which data from the real world shows doesn't happen.

[/ QUOTE ]

Are you gonna show some real data that investors have not made money in the long run beyond random luck or do we still have to stick with your word?

[/ QUOTE ]

The return streams of Renaissance, Bridgewater, AQR, SAC, George Soros, Warren Buffet etc.

they have all CRUSHED the markets for very long periods of time. in all these cases it is virtually indisputable that it isn't based on luck alone. the processes these managers have are solid and for every 5-10 year period of all of them they have generated information ratios (excess returns/std. deviation) of over 1.0 (i.e. for every unit of risk, they generated 1 unit of return. that is extremely impressive). markets are definitely beatable. it is ahrd to do it but it can very clearly be done. this is provable in the abstract without this data also since efficiency stems from the rationality of the participants and all participants are not rational, do not have similar time horizons, do not have similar risk aversions, and do not all do the same level of research.

some participants aren't allowed to do some things while other can do far more (i.e. some managers aren't allowed to short stocks while some only have 50% symmetric leeway (i.e. can only be long or short 50% rather than 100% vs. their benchmark)

if you can identify clear areas where there are irrational bets being made, then you can generate returns not based on luck alone.

i don't really think that much can be up for debate.

Barron

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The list (at least to the extent I recognize the names) are not passive investors, they are, as you point out managers of those businesses. I was very clear that I was talking about investors who have no informational advantage over the market. When a Warren Buffet takes over the management of a company that is the essence of an informational advantage.

Sorry Zygote, there is nothing to concede. When you find a way to increase the demand for gold or make it more scarce and take a positon of influence in the market you too could demontrate profits.

[DcifrThs]

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
All that link 'establishes" is that someone else besides mises likes to theorize all kinds of things that are theoretially possible but which data from the real world shows doesn't happen.

[/ QUOTE ]

Are you gonna show some real data that investors have not made money in the long run beyond random luck or do we still have to stick with your word?

[/ QUOTE ]

The return streams of Renaissance, Bridgewater, AQR, SAC, George Soros, Warren Buffet etc.

they have all CRUSHED the markets for very long periods of time. in all these cases it is virtually indisputable that it isn't based on luck alone. the processes these managers have are solid and for every 5-10 year period of all of them they have generated information ratios (excess returns/std. deviation) of over 1.0 (i.e. for every unit of risk, they generated 1 unit of return. that is extremely impressive). markets are definitely beatable. it is ahrd to do it but it can very clearly be done. this is provable in the abstract without this data also since efficiency stems from the rationality of the participants and all participants are not rational, do not have similar time horizons, do not have similar risk aversions, and do not all do the same level of research.

some participants aren't allowed to do some things while other can do far more (i.e. some managers aren't allowed to short stocks while some only have 50% symmetric leeway (i.e. can only be long or short 50% rather than 100% vs. their benchmark)

if you can identify clear areas where there are irrational bets being made, then you can generate returns not based on luck alone.

i don't really think that much can be up for debate.

Barron

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The list (at least to the extent I recognize the names) are not passive investors, they are, as you point out managers of those businesses. I was very clear that I was talking about investors who have no informational advantage over the market. When a Warren Buffet takes over the management of a company that is the essence of an informational advantage.

Sorry Zygote, there is nothing to concede. When you find a way to increase the demand for gold or make it more scarce and take a positon of influence in the market you too could demontrate profits.

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proving passive investing earns money over the long run above (our now debatable) "risk free" rate is far easier and less controversial than proving that managers can beat the markets.

i dealt with this in length when arguing w/ zygote over the "speculation" issue in that other mammoth of a politics thread.

i can sum up the issue briefly:

capitalism is based on free choices of individuals.

individual investors (actors) have the ability to earn Y% via bank deposits or investments in "risk free" assets like Treasury bonds (assme both are the same and both equal Y% for now).

companies (and corporate issuers etc.) need to raise money via equity offerings or corp. bond issues etc. and investors have a choice whether to invest in those or risk free assets (companies can go broke, markets can change etc. there are risks to owning shares of a company or claims on their cash flows). so if investors would earn Y% + X% where X% simply compensates the investors for a decrease in their purchasing power via inflation and the proabaility of default & market changes, virtually all investors would invest in the risk free asset since in expectation, they would yield the same. (the ones who wouldn't are risk loving and realize utility from taking needless risks)

therefore, in order to get investors to give money to companies and other issuers, there needs to be an excess return (XR) above Y%+X% that compensates investors for taking additional risk.

so the Total return of stocks includes a risk premium (that excess return grouped together with X%) which is transferred to passive investors even if the markets were 100% efficient.

i.e. EMH, if true, would STILL require that excess return for the markets to exist in themselves.

this premium has proved to be persistant and robust in all studies of its existance. in fact, it has proven itself to be TOO high (risk premium puzzle). this can be explained away if investors all have short time horizons and are more risk averse than previously thought.

Barron