AyG
Crazy Mango Extraordinaire
Posts: 5,871 
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Post by AyG on Jun 26, 2018 7:31:58 GMT 7
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FIREinTh
Crazy Mango
Posts: 85
Likes: 47
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Post by FIREinTh on Jun 26, 2018 10:54:56 GMT 7
Definitely an interesting read. I like that he talked about looking at the quality of the people behind companies rather than just numbers and balance sheets. Gives an argument for active human management compared to AI and machine learning which just looks through data. “And I would really plead with people that they don’t fall for this notion so assiduously put about by the financial community that somehow there is going to be a set of stocks that is dull and reliable with huge cash-flows which won’t have risk.” Reminds me of the Nifty 50 that everyone thought were solid buy and hold forever stocks in the 60's and 70's but underperformed in the 80's en.wikipedia.org/wiki/Nifty_Fifty |
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Post by Fletchsmile on Jun 26, 2018 11:05:30 GMT 7
Interesting article.
The stats seem a little suspect in how they might have been presented/ interpreted to reach a conclusion. Would be nice to see what they have actually done to reach that conclusion.
eg they pick the outliers at the top end of the scale. Wonder what happens to the picture removing the outliers (failures) at the other end.
eg note the number of tech stocks in the asymmetric returns table. They haven't been around 90 years. More traditional stocks that have been included in analysis for much longer may impact failure rates. i.e the 90 year cumulative failure rate for any industry will exceed it's 20 year failure rate in % terms.
eg Tech has also had a good run recently etc. If someone looked at wealth in absolute terms, some of these do add hundreds of billions. It's easier to significantly increase company size in significant multiples in early years for say 10 years, but no-one increases with growth rates like that for 90 years. No doubt if you could pick the companies with significant growth for the next 10 - 20 years each time on a rolling basis, that would far exceed picking the best over a 90 year period
Lot of questions around the stats but some interesting thoughts
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Post by Fletchsmile on Jun 26, 2018 11:24:05 GMT 7
Definitely an interesting read. I like that he talked about looking at the quality of the people behind companies rather than just numbers and balance sheets. Gives an argument for active human management compared to AI and machine learning which just looks through data. “And I would really plead with people that they don’t fall for this notion so assiduously put about by the financial community that somehow there is going to be a set of stocks that is dull and reliable with huge cash-flows which won’t have risk.” Reminds me of the Nifty 50 that everyone thought were solid buy and hold forever stocks in the 60's and 70's but underperformed in the 80's en.wikipedia.org/wiki/Nifty_Fifty That idea of companies doing well for a couple of decades and then becoming under performers at a later stage is one of the things I think about in the analysis data sets. The ones in their table of asymmetric returns haven't necessarily been around for those really tough stage(s). Those draw downs are by no means extreme.
Minor example: say 20 years from now Apple goes bust with a market cap peak of 1 trillion+
Depending on how they measure wealth creation, hundreds of tech start ups which cost little but failed will have minimal impact if they look only in absolute wealth terms, as their initial cost was low. Even though they lost 100%. Only takes one big winner like Apple though for large absolute differences. But if Apple folds it will remove a massive amount of absolute wealth vs its peak, and Apple hasn't been around 90 years yet. One thing is clear is that Apple's growth rate isn't what it used to be. The big big % returns have already been made on Apple.
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smokie36
Vigilante
Posts: 15,680
Likes: 9,081
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Post by smokie36 on Jun 26, 2018 12:41:07 GMT 7
My latest investment has seen a 133% return on initial capital in the last two weeks. If Neymar and Ronaldo score at least 5 goals each it will rise to a whopping 400%. Anyway carry on.  |
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Post by rgs2001uk on Jun 26, 2018 20:49:21 GMT 7
Must admit, I liked the comment. I also hold SM IT. |
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Post by rgs2001uk on Jun 26, 2018 20:57:07 GMT 7
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