Random Walk Down Wall Street

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What is your opinion on the thought that by the time any news has been released (no matter the fashion as long as it is not inside information), it has already been incoreporated into the stock price, and the theory that the overall market is so efficient that it cannot be outsmarted?

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I beleive this is one of the basic premises when dealing with stocks as a whole or the overall market in general. The market is still undefeated against anyone who has claimed to have the better of it. It has humbled men over and over again who thought they had it figured out. On msnbc this week you had one analyst saying the DOW was heading down to 4200 and on the same show the other analyst had it going to 11000 by year end. Both were convinced the other was out of their mind. IMO, this illustrates how efficient it is, and why even "experts" really have no clue.

I do think however that individual stocks can and have been invested in successfully. Careful research and due diligence has made nice profits for prudent investors countless times.

To take it further, how do individual day traders expect to beat the Einstein's who are utilizing high frequency trading algo's and are co-located with or in the exchanges and are seeing competing trade prices before execution? I don't know what happens with the S&P by end-of-year, but do know more than a few people who have lost all their savings trading. It's always a new system or tips they buy from a guru or the charts say something is extremely likely to happen that doesn't,etc. Oh well, good luck to them.

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It does take someone with lots of know how to win at day trading.

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Thanks for the compliment.

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I think some people in the end just get lucky with things.

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As the old saying goes, "I'd rather be lucky than smart." I day trade regularly and it's been "berry, berry good to me."

Today is a perfect example. As I scroll through my news reader, I see VISA posting a huge profit increase, while what seems like every other company (Sony, Nintendo, Siemens, Shell, Goodyear, Apache, Avon, Tyco, IP, WM, Dow, Cisco, to name a few) in the world with any type of relevance is reporting either massive profit drops or outright losses. And markets are up 1.5%.

Sentiment (always anecdotal) feels like it is ridiculously bullish now.

I know, I was just making a general comment, and you were the last post.

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What is your opinion

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Ah, thanks for asking!

I think that occasionally there is "free" money to be found in the financial markets but unless you are managing a ton of money it isn't worth the work required to uncover the opportunities. If you are managing a billion dollars, *maybe*. But even then you will probably do about as well with an index and can go play golf instead.

I really don't understand the fascination with financial markets sometimes. There are often very real opportunities in markets that are not actively traded where you can get a real information edge, such as local businesses or real estate.

One can get lucky in the major financial markets, but outsmart it year after year? I'm betting no. The financial markets, with a good diversification strategy, are a good place to store funds that would otherwise be idle.

If you want a shot at "beating the market" your chances are better learning the local investment scene and placing your bets there.