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ChristianKl comments on Investment Strategy - Less Wrong
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Comments (21)
I don't think there's reason to assume that you get better returns in this case for the risk that you take in this case.
I think that's a fair analysis on further consideration of the comments I'm reading in this thread. If pro fund managers can't do it, and even they lose to most index funds, what hope do I have?
But the question then remains: how do proprietary trading firms make their money above market rates? Is their only real strategic advantage their marketing and existing cash flows?
There are multiple ways. The most straightforward is luck. There's high frequency trading. People like Carl Icahn make money by changing company policy. Quants have complex statistical models that sometimes pick up effects based on which they trade that are unknown to other market participants. Some companies are likely illegally trading on insider information.