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In a message dated 98-08-20 03:44:11 EDT, you write:
<< Pretty hard to support your contention, Dan -- most hedge funds recognize
and capitalize on some stocks going up while others go down to achieve
their superior performance.
Livermore (Lefever) and crew faced simpler opponents in simpler times.
JMHO Bob >>
I have given this a little more thought and I believe I have come up with a
probablistic argument that I think is difficult to refute.
1. A positive beta means that a stock moves in the same direction as the
market.
2. Most stocks have positive betas. (I found 588 stocks in a database of
11,000 that have betas less than or equal to zero.)
Conclusion: A trader that takes a position in a stock in the same direction
as the market is moving has a higher probability of success because most
stocks move in the same direction as the market.
Please post if you see a flaw in my thinking.
Dan
Pocatello, ID, USA
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