From: steve (steve365@btinternet.com)
Date: Mon Mar 18 2002 - 08:19:37 MST
----- Original Message -----
From: "Mike Lorrey" <mlorrey@datamann.com>
To: <extropians@extropy.org>
Sent: Monday, March 18, 2002 2:55 PM
Subject: Re: Random choice versus computer models.
> Well, I imagine the five year old girl probably bought stock in
> companies whose products she used and liked. This strategy is one used
> and advocated by Warren Buffet, so it can't be all bad. Of course, a
> year period is not really sufficient. As any analyst will tell you, one
> should always invest for the long term. One year is decidedly quite
> short term. Going by decades, there is no other investment you can make
> outside stocks which will always provide positive returns (or higher
> ones).
>
The girl actually picked shares to buy by picking up pieces of paper off the
floor, so it's as close to random as you can get (I agree the Buffet method
is a good one, unless you have really strange tastes). The point about a
year being short is true of course, but even so the interesting fact for me
is that in a year when the stock market fell 16% this random choice made a
5% gain while the analyst using computer models made a 42.6% loss - much
worse even than the average, never mind the little girl's performance.
Reminds me of the way Malachi Constant and his dad did their investment in
'Sirens of Titan' - by dividing the text of genesis up into three letter
blocks and investing in companies that had those initials:)
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