Quote:
Originally Posted by David70
For the idea that the big boys do significantly better than the rest because of the speed and data they have, try to find an investment company that does significantly better than the market over the long term and it is extremely difficult. Then when you look at the past and how they did it is almost always (sometimes they are lucky) because they bought stocks of companies or sectors they thought would do better in the medium to long term, not trading hundreds of times a day. If technology and speed was the answer virtually all of them should do better than the guy that buys index funds and holds onto them. I don't think the data supports this idea.
Are there lots of examples of "big boys" that did far better than the stock market over the last 10 years because of their ability to quickly trade and their technology in making these trades?
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My training is in economics, although I am not a professional or professorial economist. I recall a story about a well respected economist (you already know it isn’t true), walking with his protege down the avenue in New York City discussing the knife-edge theory when the young protege spots a $20 bill on the ground. As they near it the youth stoops to pick it up, but the seasoned economist holds his arm, preventing him from getting the bill. The youth asks why he did it, and the economist responds, “if it was really there someone would have picked it up by now”.
Opportunities exist, but they are fleeting. Program trading works until it doesn’t - generally until another program is faster or more accurate, or both. But even that seems to be ruled by Zeno’s paradox.