From: gts (gts_2000@yahoo.com)
Date: Sun Jun 15 2003 - 19:33:59 MDT
Dossy wrote:
> gts may very well be right. However, he cannot deny that there are
> some people who can produce a reasonable income (I consider 6 figures
> reasonable for any occupation) solely by buying and selling stock.
The question is whether that person's income exceeded the buy and hold
market return after adjusting for risk, and if so then whether it can be
duplicated.
I don't deny, either, that we can find some people who bet on the outcome of
a coin flip ten times and won each time.
In a world of coin-flip bettors that coin-flip bettor will become famous. He
will write books on the proper way to predict coin-flips. Like Warren Buffet
and Peter Lynch, he will become a folk hero among hopeful coin-flip betters
everywhere who want so desperately to believe they have the power to predict
coin-flips.
Here is another way to look at this question:
There are a small handful of people in this world, namely Buffet and Lynch,
whose performance over time was so extraordinary that it is tempting to say
they really have skill. But the number of people who have this alleged skill
is so small that it becomes irrational to assume that just anyone can have
it or obtain it. These gifted people, assuming they really exist, appear to
belong to a different species of humans.
In this way the arguments for the existence of market skill are much like
arguments for the existence of telepathy. There are some tantalizing stories
that seem to be convincing evidence that telepathy is a real phenomenon.
However parapsychologists have been unable to prove its existence under
controlled conditions. An honest parapsychologist can say only that
telepathy might exist, but if it exists then its existence is so rare that
it doesn't show up on the radar screen. It would be irrational therefore to
assume that one is telepathic.
-gts
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