I just something in ivory tower which I believe you guys may be interested as well
So I am sharing with you guys , about a book I read recently
So I am sharing with you guys , about a book I read recently
Trading is certainly not my style, I am more focused on long term investing.
Recently I read a few pages of a nice book, Fooled by Randomness.
The author mentions some interesting statistics, which I will try to somehow summarize in a few lines :
He mentions that in the last 40 years, SP500 raised about 12% a year. (Average)
If you look at charts once a year, about 90% of the years the sp500 index was green, and 10% in red.
However, the more you look, the worst it is: if you look the charts every quarter , you will have about 70% green and 30% red.
If you look the charts daily, you will see 54% green and 46% red.
Additionally, our generation is now looking the charts every hour or even every minute. This is so crazy. If you do that, probably you will see 50% -50% , even if the long term is green.
This is how you are Fooled by Randomness.
After reading that I got more relaxed about charts..
Recently I read a few pages of a nice book, Fooled by Randomness.
The author mentions some interesting statistics, which I will try to somehow summarize in a few lines :
He mentions that in the last 40 years, SP500 raised about 12% a year. (Average)
If you look at charts once a year, about 90% of the years the sp500 index was green, and 10% in red.
However, the more you look, the worst it is: if you look the charts every quarter , you will have about 70% green and 30% red.
If you look the charts daily, you will see 54% green and 46% red.
Additionally, our generation is now looking the charts every hour or even every minute. This is so crazy. If you do that, probably you will see 50% -50% , even if the long term is green.
This is how you are Fooled by Randomness.
After reading that I got more relaxed about charts..
Thanks for posting this. I'm ignoring short term price movements from now on and making long term investments instead.