From: gts (gts_2000@yahoo.com)
Date: Sun Jun 15 2003 - 01:50:48 MDT
Rafal Smigrodzki wrote
> ### Specifically, if the distribution of gains is not the
> normal curve (the function of the number of traders plotted
> against the gains they make), but shows a skew, or a
> secondary peak, this would be strong evidence for the
> existence of traders who really know better than others.
And such is not the case. The curve is not skewed. It is normal. It is
exactly the same distribution we would expect to see if the traders used
coin flips to make their trading decisions.
Moreover, because of the increased transaction costs of active trading, the
mean of the distribution is substantially lower than the market return.
Typically 3 out of 4 mutual funds underperform the S+P 500 index each year
on a risk-adjusted basis.
-gts
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