reddingrunner (93.75)

Leather balls.

July 01, 2011 – Comments (0)

My CAPS accuracy rating is currently around 57%.

I aim/hope to beat the market 60% of the time but I'd gladly settle for 57%.  

57% (in real life with real money) is pretty much genius level.

You can get really rich with a 57% success rate in the market.

The problem is:  If my system is good for a 57% success rate, it will lose 43% of the time and the distribution will be random.  I could easily lose 9 of 10 consecutive picks on my way to a 57% success rate.

And once our system fails us (with real money) 3 or 4 times in a row, or 10 times out of 12, we start worrying, tinkering, changing... and before the law of averages has caught back up to us we've changed systems and miss the rebound.

Do I believe in my system enough and have what it takes to stick it out through the losing seasons (maybe several years long!)?

Joel Greenblatt says that this is why so few take advantage of his Magic Formula.  They abandon it in the losing spells despite its long-term history of success.

I saw a bumper sticker: "It takes leather balls to play rugby."

Or to play the stock market.