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Warren Buffett made an interesting comment about trader performance records with his famous "coin flipping contest" argument. ie. Even with millions of participants in a huge tournament someone will still win the tournament. Does that make the winner an expert coin flipper?
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You need to reread the essay. He makes the exact opposite point.
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That said, having read both books, and being a portfolio manager by trade, I think that there is a grey area in between the two books. I think it is possible to beat the market (and have consistently done so myself) but like anything else worthwhile, it is fairly difficult to do, is a lot of work, and takes a certain disposition.
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I agree.
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For most people I think trading is -EV. This is confirmed by the numerous studies on retail trading accounts, mutual fund performance, day-trader failure rates, and even independent floor traders who constitute a hugely motivated and full-time group.
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Very true once again. I agree with the other posters comparison to poker though. However, just because I think the market can be beat doesn't mean I am willing to bank my retirement on a belief that I can beat it. Although trusting someone who has a proven track record (Bill Miller, etc.) with my retrement doesn't seem like a bad idea.
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In other words, who wants to spend hours a day working on trading when you only have a ~10% chance of beating the market. Of those ~10%, how many beat the market by say double-digits per annum? If not, does the extra 5% a year compensate for the time, training, and stress of just holding the SPY's which if you hold them long enough are an almost sure thing?
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Yes 5% would be worth it. Lets take an example of 10,000 invested over 30 years.
At 10% - $174494.02
At 15% - $662117.72
that's an oversimplification, but the point is 5% is a big enough edge to make a huge difference. At 1 or 2 percent the opportunity cost of making other income may be greater than the extra returns depending on your professional skills.