Re: Reconciling \"Random Walk\" with \"Market Wizards\"
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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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Obviously not, but I think the analogy is poor.
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I don't think the analogy is that far-off. My experience is that a good portion of the people profiled in the Market Wizards books are the "coin flippers" who got lucky. There are some notable exceptions, including the guy I work for.
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Buffett and Paluka are correct.
The "coin flipping" analogy is dead on.
The overwhelming majority of mutual funds managers...
That tout "outperforming" the S&P 500...
In other words...
Doing better than MINUS 21% (plus 2% annual dividends)...
Over the last 5 and a half years...
Are just the lucky "coin flippers".
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