Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!

In this Discussion

Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

    Support MFO

  • Donate through PayPal

Barry Ritholtz: Average Returns, Rarer Than You Think

FYI: One of the most fascinating things about markets is the sheer volume of data they generate. Every day, millions of data points get created. The vast majority of this amounts to little more than noise. This endless stream of information leads thousands of us everyday on a hunt for meaningful signal amid the cacophony.

Most of the time, we are unsuccessful. We can be tricked into seeing significance where none exists. Our pattern recognition engines are fooled by what turns out to be mere randomness (there’s a good idea for a book in that). There is a meaningful needle buried somewhere in the haystack of numbers, but we underestimate both how hard it is to identify, and just how huge that stack is.
Regards,
Ted
http://www.bloombergview.com/articles/2015-04-09/average-market-returns-are-rarer-than-you-think

Comments

  • That was a good read.
  • "there’s a good idea for a book in that"

    Actually, this topic has been widely and well covered an a number of books concerning chance and randomness of numbers and events. Invalid gambling perceptions frequently fall into this general area also.
  • edited April 2015
    "FYI: One of the most fascinating things about markets is the sheer volume of data they generate. Every day, millions of data points get created. "

    If you look at the last quarter earnings presentation for Intercontinental Exchange (ICE), 22% of revenue is data services.

    https://www.theice.com/market-data

    Note: long-term holding in ICE.
Sign In or Register to comment.