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A Man Who Abandoned Value

institutionalinvestor.com

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Re: A Man Who Abandoned Value

#21

Post by slibhb »

smabie wrote: post #13
elefanten wrote: post #2

Seems like a case of survivorship bias. Unclear what this guy is doing that's particularly unique. He invested a lot in Amazon and Tesla, relatively early. Out of everyone investing in the time period, someone was bound to be holding the most of some of the stocks that do crazy things. Having Asperger's, starting as a CPA, not using value investing, reading Christensen... I doubt any of these are gonna shake up insti…

Using some simple math (and somewhat inaccurate math), let's calculate the chance of the null hypothesis being true: he has no skill and it is just luck, assuming 10% annualized volatility for the market and 8% annualized return. By my calculation, over the six year period, there's a 4.82e-18 chance that his returns are due to luck and the null hypothesis is true. Of course I'm simplifying a lot, but I think you get…

Unlikely things happen all the time. If he lost money, this article wouldn't exist.

Also, my disdain for this guy is not due to finance. It's due to his investment strategy being a Seinfeld episode:

> I just totally gave up and said, "I'm going to do the exact opposite."

Re: A Man Who Abandoned Value

#23

Post by robotresearcher »

smabie wrote: post #13
elefanten wrote: post #2

Seems like a case of survivorship bias. Unclear what this guy is doing that's particularly unique. He invested a lot in Amazon and Tesla, relatively early. Out of everyone investing in the time period, someone was bound to be holding the most of some of the stocks that do crazy things. Having Asperger's, starting as a CPA, not using value investing, reading Christensen... I doubt any of these are gonna shake up insti…

Using some simple math (and somewhat inaccurate math), let's calculate the chance of the null hypothesis being true: he has no skill and it is just luck, assuming 10% annualized volatility for the market and 8% annualized return. By my calculation, over the six year period, there's a 4.82e-18 chance that his returns are due to luck and the null hypothesis is true. Of course I'm simplifying a lot, but I think you get…

You can do a similar calculation about a particular shuffled card deck.

Re: A Man Who Abandoned Value

#24

Post by u678u »

brianmtully wrote: post #5

I've had a 210% year toying around with stocks. I just assumed everyone had been doing well since the drop last March.

By definition the median investor makes what the total market return is. Something like VTI is up 25% since Jan 1 2020. If tech investors outperformed a lot, there are lots of boomers who haven't kept up.

Re: A Man Who Abandoned Value

#25

Post by TooKool4This »

slibhb wrote: post #21
smabie wrote: post #13

Earlier quoted context omitted.

Using some simple math (and somewhat inaccurate math), let's calculate the chance of the null hypothesis being true: he has no skill and it is just luck, assuming 10% annualized volatility for the market and 8% annualized return. By my calculation, over the six year period, there's a 4.82e-18 chance that his returns are due to luck and the null hypothesis is true. Of course I'm simplifying a lot, but I think you get…

Unlikely things happen all the time. If he lost money, this article wouldn't exist. Also, my disdain for this guy is not due to finance. It's due to his investment strategy being a Seinfeld episode: > I just totally gave up and said, "I'm going to do the exact opposite."

> Unlikely things happen all the time. If he lost money, this article wouldn’t exist.

Exactly! The person you replied to did the right calculation but completely threw away the context. The argument here is akin to p-hacking where all the investors in the world are the experiments and this article merely picked the one that got lucky.

Different scenario but similar argument, I roll a large set of dice, 5x rolls each die. If the set is large enough, one of the dice is likely to land all 6s. While that is unlikely, that doesn’t automatically mean the diced are unfair. It’s not just enough to reject the null hypothesis but you also need to prove the new hypothesis. Not to mention having a solid working theorem for why the alternate hypothesis is correct.

Re: A Man Who Abandoned Value

#27

Post by jbverschoor »

justaguy88 wrote: post #10
fspeech wrote: post #8

Earlier quoted context omitted.

Since on average everyone gets the market return someone must be underperforming the market in order for you to be overperforming.

Or maybe everyone did go up, but just haven't gone down yet in the bubble pop

The USD bubble?

Re: A Man Who Abandoned Value

#29

Post by jdmoreira »

Ok, so he did well for a few years in a bull market.

anyone can make money in a bull market. You just buy on hype and sell on higher hype. It’s called momentum trading.

Call me when he beat the market for 40 years and I'll be impressed.

Re: A Man Who Abandoned Value

#30

Post by vasco »

jdmoreira wrote: post #29

Ok, so he did well for a few years in a bull market. anyone can make money in a bull market. You just buy on hype and sell on higher hype. It’s called momentum trading. Call me when he beat the market for 40 years and I'll be impressed.

And in the game where "anyone could make money", they did the most of all the funds that were assessed. If that doesn't count for something, what does?
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