This is a great summary of why stock pickers, active managers are doomed to underperforming the whole market (index).
The concept of skewness – that only a few stocks (AAPL, GOOG) are responsible for the majority of returns. Missing out on these stocks means the rest of your portfolio has no chance of matching the overall returns.
There’s a good analogy with poker chips in a bag from the article. Another one would be if the Lottery’s jackpot got so big that the expected winnings of each ticket was >$1. The index strategy is to buy every ticket possibility. If your strategy is just to buy a couple, your expected return is >$1, but if you don’t hit the winning ticket, your actual return is going to be terrible.
What Modern Democracies Didn’t Copy From Ancient Greece
This was an interesting part of their Democracy. The fear of any one demagogue becoming too powerful. I wonder if this system were in place, how would this change politican’s actions. They would have to walk a fine line of wanting to gain power/popularity, but not too much power.
Many modern politicians would surely relish the chance to see rivals banished by popular vote. In fifth century B.C. Athens, this was actually possible. Citizens met annually in the agora—a public center of commerce and politics—and voted on whether any individual was becoming too powerful. The person with the most votes was exiled from Athens for 10 years.
The names of candidates for exile were scratched onto small potsherds and tallied, with a minimum of 6,000 votes required to banish someone. Called ostraka in ancient Greek, these potsherds are the root of the English word “ostracize.”
Action cam knock-offs are getting very good (even surpassing) the GoPro:
XiaoMi Yi (2K) – $81 to $100
XiaoMi Yi 2 (4K) – $250, has built-in touchscreen
- It’s hard to know the difference between “I was wrong” and “The odds were in my favor but it just didn’t work out.”
- It’s hard to know the difference between “Be patient” and “Change your mind when the facts change.”
- It’s hard to know the difference between contrarian and cynical.