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To: realtraders@xxxxxxxxxxxxxx
Subject: Randomness
From: Troy Kelley <tkelley@xxxxxxxxxxxx>
Date: Thu, 26 Mar 1998 02:15:25 -0500
Organization: arl
References: <199803260014.QAA06248@xxxxxxxxxxxxx>
Reply-To: tkelley@xxxxxxxxxxxx
I just had a long argument with a friend of mine who says that
predicting the market is impossible. It is randomness. I counter with
the fact that new theories of chaos say randomness is predictable. And
randomness is predictable, my friend concedes, but that doesn't mean I
can make money from it. I say some people make money in this profession,
but my friend just said they are all snake-oil salesman. And the real
traders that make money can't do it for very long. They just discover
some random variation in the market and exploit it for a short time,
then write books about it and sell systems.
I started thinking too, that he might be right and that is one reason
this is so stressful. Because your mind is telling you that it is not
predicable, but everyone in the business is telling you it is. Everyone,
that is, with something to sell you. If they can convince you that it
is not random, they can sell you something. I pay 300 bucks a month for
real-time futures data. THAT IS OUTRAGEOUS. I could be driving a very
nice car for that amount of money. Just because someone has some
information that I think I can figure out and predict, they make a
fortune from me. It must be true, or I wouldn't have to pay so much
money for the data -right? So, it is like a casino, and the only people
getting rich are the people who own Wall Street.
I am even starting to think that people like Jim Rodgers and Warren
Buffet were lucky too. They were just lucky with a different strategy,
buy and hold. I would argue that even that strategy has so many
variables in it, that it is difficult to predict on a consistent basis.
Then the only people who are really right are the people who take the
long term approach and the academics. I always wondered way so many
people criticize the random walk theory. All of those people want your
money. They are the practitioners not the academics. They don't care
about theory, they want to make money, and they do a good job.
OK realtraders, convince me otherwise.
Troy
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