Re: Reconciling \"Random Walk\" with \"Market Wizards\"
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John Allen Paulos does a great job of laying out many market theory's in his book "A Mathematician Plays the Stock Market." One point that he makes that I have really carried with me since reading it is that many market "gurus" like Buffett, Peter Lynch, or John Neff have an effect on the market and their stock choices can become self-fulfilling after a short-term period of success. That is, the market will follow them and prop up their moves.
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This is patently false when it comes to Buffett. He wasn't even well known until the 80's but had beat the market almost every year since the mid-50s. Since he's become a "rock star" his level of outperformance has actually declined, but that's primarily due to the enormous size of his portfolio dragging down his returns.
Buffett's success is basic value investing principles, he buys undervalued securities. He's just been at it a bit longer, and is a bit better at it, than all the other value investors.
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