How Bloggers Beat Wall Street
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How Bloggers Beat Wall Street
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Re: How Bloggers Beat Wall Street
#2There are a lot more bloggers than professional stock analysts. Therefore, doesn’t it follow that some bloggers would be the most accurate based on random chance alone?
Re: How Bloggers Beat Wall Street
#3Most of the top predictions for Apple's "surprise blow-out quarter" were from the finance section of a message board for Apple enthusiasts. This is like saying the New York Jets' message board is smarter than Vegas sportsbooks because they predicted an upset win over the Patriots.
Re: How Bloggers Beat Wall Street
#4I have several problems with the CNN article this one is based off of.
1. Why take a screen shot of the spreadsheet?
2. Why are there only 11 amateurs? Amateurs greatly out number pro but in this table they're a minority. Seems like sample bias to me.
3. Where is the context and the history? The bloggers all predicted larger increases then the pros. Do bloggers always predict higher numbers? If so it's no surprise they did this time.
Re: How Bloggers Beat Wall Street
#5This should be expected, bloggers are the 'market'. This is the expected result of the efficient market hypothesis.
The market will beat estimates of professionals (or any one individual) most of the time. This is exactly why an index fund will outperform most mutual funds even before the fund manager takes his 2%.
The guys that can really guess the market usually start their own hedge fund. And they use ingenious methods, such as one hedge fund that orders satellite photos of Wal-Mart parking lots and estimates quarterly performance based in part on those photos.
Re: How Bloggers Beat Wall Street
#6[deleted]
Re: How Bloggers Beat Wall Street
#7Most of the top predictions for Apple's "surprise blow-out quarter" were from the finance section of a message board for Apple enthusiasts. This is like saying the New York Jets' message board is smarter than Vegas sportsbooks because they predicted an upset win over the Patriots.
Hi jhamburger, thanks for the comment!
I'm the author of the article and want to present a different perspective:
I don't think you're being completely fair to these guys. Sure, they're Apple enthusiasts but they're also digging significantly into the data to back up their analysis. For example, check out one users' analysis on Apple's Cost and Cost Ratios to Revenue: http://www.postsateventide.com/2010/11/apple-quarterly-compa... (Found here: http://www.macobserver.com/tmo/forums/viewthread/79667/).
Re: How Bloggers Beat Wall Street
#8There are a lot more bloggers than professional stock analysts. Therefore, doesn’t it follow that some bloggers would be the most accurate based on random chance alone?
Well, if in the top 10 there were only a couple bloggers, that would be a reasonable statement, but the top 9 were all bloggers. That doesn't sound like random chance to me.
Re: How Bloggers Beat Wall Street
#9This should be expected, bloggers are the 'market'. This is the expected result of the efficient market hypothesis. The market will beat estimates of professionals (or any one individual) most of the time. This is exactly why an index fund will outperform most mutual funds even before the fund manager takes his 2%. The guys that can really guess the market usually start their own hedge fund. And they use ingenious me…
I think you're confusing a lot of different things here. This is dealing with predicting quarterly results, there isn't any direct connection with the stock market.
Re: How Bloggers Beat Wall Street
#10There might be another issue at play here: perhaps the investment firms represented by the professional analysts have incentive to under-predict a company's performance in their public-facing reports.