Jul

6

how has the evolution of regularities in markets made it much harder to beat the 52% accuracy that no sports better can achieve to break even? one way is the ever changing relation between bonds and stocks between years. what else?

Larry Williams writes:

Crude's influence on stocks [has changed over time]

Alex Castaldo offers:

The Great Financial Crisis of 2007 and 2008 revealed a number of regularities that (I believed) would be very profitable in the future, but careful monitoring of them after their discovery proved very disappointing to me. For example, trend following that would have gotten you out of stocks and back in during that decade did not work well in the Covid crisis with a faster decline and faster recovery.

Nils Poertner comments:

a mystery indeed - some folks have lousy accuracies (say sub 25pc) and still do well - since a few things they do on top turn out great, eg, the lousy equity trader who got into ethereum early enough (and out when others got into it).

Kim Zussman adds:

Yield curve inversion from 3 months and 500 points ago:

Hernan Avella comments:

Like sports, the evolution of markets is guided by the fitness of the players. We are not competing against prospective cab drivers trading in the pits anymore. But armies of highly talented people that invest thoughtfully and systematically in every step of the process: Infrastructure, trading business practices, research, execution, recruiting. I have a friend working in one of these highly capable groups. Around 70 people. All markets 24 hours, every single approach possible.

Very few of us from the old days survive. The Chair might be the oldest and longest lasting point and click trader. Such a great competitor!!! Ray Cahnman, founder of Transmarket Group is up there as well.

Vic replies:

the point-and-click survivor owes it all to Lorie and Dimson who taught there is a drift. also one learned not to succumb to conspiracies to margin one out.

Jared Albert writes:

Modern technology, particularly around real time customer segmentation and portfolio correlation, squeezed more value from the 'customer as the product' than before.


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