Re: Strange logic - losing out because tax rate drops from 22% to 20%

On Jan 31, 8:52 am, "Norman Wells" <nor...@xxxxxxxxxxxxxxxxx> wrote:
"Tim Woodall" <devn...@xxxxxxxxxxxxx> wrote in message

news:slrnfq214f.k2h.devnull@xxxxxxxxxxxxxxxxxxxxxxxxxxxxx



I remember a few years ago there was a share dealing competition. I
can't remember the details but a bunch of school kids managed to beat
all the expert fund managers. And their technique was to jump in quick
on every bit of news and ride it up and then sell again pretty quickly.
I remember one commentator saying that although they'd won some other
fund manager was much better positioned for the future. But the school
kids could now follow exactly the same strategy as he would and they'd
be starting with a bigger pot.

Indeed. But it's no proof that their system works. In any competition like
this where winning is all, and there is no difference between finishing 2nd
or last, you have to take the biggest risks, otherwise you cannot possibly
win. Sometimes, if you take the biggest risks, your gambles come off and
you win as the schoolkids did, and you get all the fame and glory. If they
don't come off, as is usual, you lose heavily, but there are no
consequences. You're never heard of again and it doesn't matter.

'Expert fund managers' cannot afford to gamble all on the biggest risks
because there is a real difference to their clients (or to their reputations
if it's just notional) between finishing 2nd and last. Such competitions
will therefore always be won by a lucky gambler.


It's no proof that their system will continue to work. Past
performance and all that. But this wasn't a one off lucky buy that
they did. It was repeated multiple times during the competition. They
were making consistent small gains.

Tim.


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