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urgjotonlkec t1_j3rp7w7 wrote

Reply to comment by LordFaquaad in [OC] Mr. Buffett - The Older The Wealthier by LeverageShares

Not really. Let's say you go to Vegas with $10,000 and put it all on black at the roulette table. There's a roughly 50% chance you double your money and 50% chance you lose it all. Win 23 times in a row and you will almost 110 Billion. That sounds extreme unlikely, but if ever US adult did it you would expect to have made 20 people succeed. Ironically that's roughly the same order of magnitude of centi-billionaires in the US.

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LordFaquaad t1_j3rqk9v wrote

The difference is that roulette is a game of chance and investing in good companies isn't. That's the entire thesis behind value investing which buffett followed. The luck he talks about is getting in at the right time and exiting at the right time.

Speculation happens in the market but the only people that really benefit are the HFT traders, hedge funds and quantfunds / banks due to the trade volume/ speed of transaction. The market isn't based so much on chance as people think especially if you have enough money to move the direction of the stock

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urgjotonlkec t1_j3rs2vy wrote

In any efficient market winning and losing is 100% luck just like a casino. Obviously if you have enough money you can push people around in a way that an average investor can't, but even getting to that point takes a lot of luck.

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LordFaquaad t1_j3rzq86 wrote

You're telling me that every major investor is just luck? It had nothing to do with skill, knowledge and understanding?

Also the efficient market states that prices are representative of assets. This is simply not true in the current market. The market isn't a casino that has priced in everything all thr time. The companies have Financials and based on those Financials and other factors, investors make decisions.

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urgjotonlkec t1_j3s198c wrote

>You're telling me that every major investor is just luck? It had nothing to do with skill, knowledge and understanding?

Yes, that's a pretty common school of thought supported by considerable research. For instance people have looked at the fund managers with the highest performance in given years and there's no correlation year to year.

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