Another prediction for future

[OldShooter]

It is kind of an intellectual mystery to me that guys like this don't understand the arithmetic of active investing as William Sharpe explained it to us over 25 years ago. Any pool of active investors will inevitably produce results, before fees, that are the average of the stocks they are investing in. After fees, its a loss.

Per Upton Sinclair, though: "It is difficult to get a man to understand something, when his salary depends upon his not understanding it!"

The key to these claims of "beating" is that the managers are investing in things outside the benchmark average that they are comparing themselves to. In fact, the last issue of Schwab's investor magazine quoted a Schwab panjandrum who said that they try to identify outperformers by finding managers who have "the courage" to buy outside their benchmark category.

The active managers are starting to figure out how to game the system this way, so these arithmetically-impossible claims will only proliferate. Worse, the hucksters will be very effective in confusing the investing public with these outperformance "facts."

[6miths]

^

What he said!

[foxcreek9]

Quote:

Originally Posted by street I'm sure most have seen this already but these predictions articles always entice me to read them. Again just one persons opinion and who really knows what will happen. https://www.msn.com/en-us/money/mark...7Kz&ocid=edgsp

Let’s look at his track record from 2012

https://www.usatoday.com/story/money...tlook/4205637/

And again from 2015

https://www.newsmax.com/finance/robw.../30/id/694055/

He is consistent and I suspect will be right eventually.

[joeea]

For the loser now will be later to win. For the times they are a-changin' .

[OldShooter]

Quote:

Originally Posted by foxcreek9 ... He is consistent and I suspect will be right eventually.

Yup. At which point the clueless press will anoint him "genius monkey" and he will remain so elevated until his next two predictions are busts and a new genius monkey replaces him.

[street]

Quote:

Originally Posted by foxcreek9 Let’s look at his track record from 2012 https://www.usatoday.com/story/money...tlook/4205637/ And again from 2015 https://www.newsmax.com/finance/robw.../30/id/694055/ He is consistent and I suspect will be right eventually.

Thanks and eventually we all can predict because you have two choices. It goes up or it goes down how hard is that to predict. LOL

[jjflyman]

Eventually the predictions of doom and gloom will come true. Those investors that recognize what is happening at the beginning will be fine, those that don't believe what they are seeing will lose a lot of their money. IMHO

[OldShooter]

Quote:

Originally Posted by jjflyman ... Those investors that recognize what is happening at the beginning will be fine, ...

Absolutely true, of course. Now please explain how this is done.

[HFWR]

I’d have to agree that gdp/equity returns have been artificially juiced by huge deficits and money-printing. The piper will be paid, though when and how are anyone’s guess...

[MRG]

Quote:

Originally Posted by pb4uski Excuse me if I'm skeptical when the chief strategist for a full-service brokerage and investment banking firm claims: Seems a little self serving to me. I'll take my chances with the index... I'm so far ahead compared to active managers past peformance that even if he is right I'm still ahead.. just a little less ahead. Besides, I'm to lazy to do the research necessary to find these genius managers that will outperform the indices... after all, I'm retired. He looks like he's retirement age and he's still working.

+1

"Losers will be passive investors". That's been the mantra of active managers since 1975.

[frayne]

Quote:

Originally Posted by MRG +1 "Losers will be passive investors". That's been the mantra of active managers since 1975.

+2

And I'm fine with the investing public buying into active managers.

[jjflyman]

Quote:

Originally Posted by OldShooter Absolutely true, of course. Now please explain how this is done.

I can't..LOL
But I'm sure some people will pull out at the first sign of trouble (maybe even right now) and if things get really bad, will claim to have known it was coming!

[audreyh1]

Quote:

Originally Posted by jjflyman Eventually the predictions of doom and gloom will come true. Those investors that recognize what is happening at the beginning will be fine, those that don't believe what they are seeing will lose a lot of their money. IMHO

Huh? Plenty of people are always thinking they are seeing disaster around the next corner. They are not always right. So I have little expectation that folks will “recognize what is happening at the beginning”. That is a pipe dream. A few folks will be lucky is all. And that luck may still only be temporary.

[VanWinkle]

Quote:

Originally Posted by audreyh1 Huh? Plenty of people are always thinking they are seeing disaster around the next corner. They are not always right. So I have little expectation that folks will “recognize what is happening at the beginning”. That is a pipe dream. A few folks will be lucky is all. And that luck may still only be temporary.

+1 well said

[OldShooter]

Quote:

Originally Posted by audreyh1 Huh? ... A few folks will be lucky is all. And that luck may still only be temporary.

For those who have not read Nassim Taleb, the main theme of his book "Fooled by Randomness" is the observation of people who have gotten lucky and, from that, have concluded that they are geniuses.

Taleb can be kind of a lunatic from time to time, but IMO he is worth reading, I suggest starting with "Fooled by Randomness" and then moving to "The Black Swan." I am not such a fan of his later books, but YMMV.

[JoeWras]

Quote:

Originally Posted by OldShooter For those who have not read Nassim Taleb, the main theme of his book "Fooled by Randomness" is the observation of people who have gotten lucky and, from that, have concluded that they are geniuses.

Yeah, I know. I've heard about it from many of the geniuses at my Megacorp as they waved their stock options in our faces.

[Totoro]

Buffett's coin flip competition is the same principle.

If a 100 million people participate, there will be a few that flip heads 26 times in a row (and 26x tails too, poor sobs).

They'll continue with writing a book, selling the media rights about "the American dream: how to get a heads with just flipping coins".

.. or real estate
.. or stocks

.. Rich flipper, poor flipper?

[garyt]

Quote:

Originally Posted by marko Whether it's the market or general social issues I just wish there was someone out there tracking these predictions. "In 2016 Mr X predicted Y..." Worse yet, now you have "He predicted the recent downturn, now he's predicting X"

Exactly. This guy has probably been predicting a drop for years and he's finally right. It would be great to see what many of these experts predicted 5 and 10 years ago.

[Maenad]

I'm fascinated by the different responses I'm seeing in this thread versus a market prediction here in our own community: Sold all my stocks

It seems like the comments were a lot more credulous there, giving R_M credit for predicting the Great Recession and credit that maybe he's right again.

Is it because we feel like we know Running_Man?
Is it because he's just another person, and doesn't have a blog or book deal riding on his ability to be "right"?
Is it because it feels more "jerkish" to criticize to someone's "face" as opposed to commenting on a post somewhere else?
Is it because there were different people posting in that thread versus this one?
Is it my own bias in my memory of that thread?

Something else? I'm kinda curious - it seems like a great example of something in human behavior, I'm just not sure what.

[OldShooter]

Quote:

Originally Posted by Maenad ... a great example of something in human behavior, I'm just not sure what.

Well, speaking broadly, we have 100,000 years or so of natural selection that has encouraged greed and optimism. ("Greed" in the non-pejorative sense of "acquisitiveness.")

Men who amassed great amounts of wealth, food and wives, survived the famines and disproportionately contributed to the gene pool. Poor, starving men with no wives were selected out of the species.

Example: https://www.smithsonianmag.com/smart...han-180954052/

And it was the optimists who worked and strived to make things better. The pessimists didn't participate and probably starved or opted-out via suicide in many cases.

So ... Greed and optimism drive a lot of things, including casinos, lotteries, and our hitherto fruitless dream of finding a genius monkey.

Re that older thread I don't think I participated at all. The OP simply bet on a hunch about what is arguably a random walk. He might win. He might lose. But having a winning hunch does not imply any expertise. Nor does having a losing hunch imply anything.

(We have also been bred for aggressiveness and tribalism, but those are OT here.)