The 'smell' of victory

When we tested out some strategies, we found out we could be a billionaire if we followed the successful one for the last 10 years. Most likely this is the false smell of victory, so do not wake up your wife to tell her your holy trail discovery. If it is that easy, most of us should be sipping some exotic, tropical drinks in some exotic, tropical island served by some exotic, tropical ladies :)

There are no investor heroes including Buffett.

The follow are the reasons I can think of now.

* The strategy worked last 10 years may not work for next 10 years. When one strategy is a headliner, most likely it is the top for the strategy. When too many follow, it will fail. It is the herd psychology.

* Survivorship bias. When you play with penny stocks that usually are big winners or big losers, half of them may bankrupt. Most historical database may not keep them. It gives you better performance than the actual. If you do not include Lehman Brothers, would your portfolio perform better?

* When you deal with penny stocks, you may end up to buy most of the company if you're successful. In reality, we never do so.


However, click for the strategy that always works and most likely will beat S&P 500.

(c) TonyP4 2011. Written in 12/19/11. Updated 12/19/11.

#####
Disclaimer: All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.