10k post

[SlowHabit]

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I think the only way to beat the market is with insider information of some sort.

Mark cuban said it pretty well, he only buys stocks in which he can buy enough to have a "real voice" in the company, and in which he can make changes, etc.

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I disagree with this.

Buying with "inside information" would have been a big edge back in the old days when "insiders" took forever to report their stocks' position every time they increase or decrease their stake in the company. Nowadays, you know about 3 days [I may be wrong on the exact number] after an insider buy or sells his stock position.

One might argue that by the time we know what the insider does, it might be too late for us to sell/buy profitably. This is false and the explanation is too long for me to type since I have to show various scenarios and explain what each scenario means.

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by insider information he did not mean if the insiders are buying or selling, he meant information as in knowing if the company is going to fail to meet estimates and to sell before the market knows that.

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If you do your homework, then you should obviously avoid companies with histories of executives selling a few days before releasing their failure to meet estimates.

[ahnuld]

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m arket is zero sum obv

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Not so obv if you think about it.

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well, its not zero sum. Little old thing called productivity and technological advances. More from less allows it to be more than positive sum game

[donkeykong2]

even without productivity and technological advances the market could be profitable as long as capital helps the production and other people prefer consumption now to consumption later on.

[AnthonyH]

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In my view, the best way for a pokerplayer to invest is to split your money between: an index, bonds and only a small part in more risky instruments (ONLY if you know what you are doing).

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Interested if you could give a few more examples? For example, would opening a small brick and mortar business (restaurant, ups store, etc.) fall under this category?

[NajdorfDefense]

RE v Stock Market is an unfair comparison. Nearly ALL RE has overt or inherent leverage. Many office buildings are 5-10x levered, for example, so are retail centers. If you levered up a portfolio of index funds, you'd be way, WAY over 11% long-term.

[NajdorfDefense]

A lot of people said the loved and PMd me about this post:
http://forumserver.twoplustwo.com/sh...age=0&vc=1

[NajdorfDefense]

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I think the only way to beat the market is with insider information of some sort.


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You can think it all you want, but this is clearly false. Any sort of reasonable asset allocation has slaughtered the market for going on 10 years now. There are numerous professional mgrs with long-term track records that, even in equity-only ports, crush the market beyond belief.

As of end of March 2007, the SP500 returned about 29% gross, before fees, in 8 years -- do you consider this good performance? It trailed any reasonable asset allocation model as well as bond portfolios. See above linky for in-depth analysis, papers, and suchlike.

[NajdorfDefense]

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m arket is zero sum obv

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Not so obv if you think about it.

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Also, completely false. Market is positive sum, while Alpha is zero-sum.