Quote:
Originally Posted by Micturition Man
Has it been proven that there are a non-trivially-small number of people who are able to day trade with a +EV? It's an honest question, not trying to bash the daytraders in this thread, and I have nfi what the answer is.
It's just that from my reading on market efficiency, and the studies of mutual funds and hedge-funds (the former of which in particular virtually never show longterm abnormal profits), it's a little hard to believe that daytrading actually works.
Just the idea of people jumping into daytrading and expecting to make 40% returns really sets off my BS alarm.
On the other hand a market is a market, they all seem to be beatable by at least a few people.
I find it hilarious how every profession thinks academia is full of ****, but people on the outside of a profession take academia as gospel. Business people laugh at academia's ideas. Political science people laugh at academias ideas, etc. But when it comes to finance, outsiders are so taken that the efficient market hypothesis and friends that they believe every word. Its such a compeling argument that seems to make the world a much more controled and ordered place.
The truth is, academics keep this theory alive, because they need their finance formulas and equations to work out. Without the assumption of a perfect market, research hits a wall. The sheer spectrum of variables makes any kind of meaningful research nearly impossible. So, to keep the dream alive, they devise different theories on the market that only holds true in academia wonderland.
And outsiders just take it as the truth, without questioning it. Once you understand the dynamics of a marketplace, its then you can read and apply theories about how to analyse it. Day trading is like being a ticket scalper, you need to read the market and exploit ticket pricing problems. Its not without risk, because unforeseen events can destroy your strategy or make it redundant. This is different to the theory of investing, which people seem to mix up.
By the way, you obviously haven't read much. Funds have been returning obscene amounts of money for a long time. I'm not sure why you picked 40%, but some funds crush it, and so do a lot of day traders.