2018年3月14日 星期三

Is there on earh a guaranteed winning way in investing?

In the high time of market trend, there are many ads about tuition on investing in all kinds media. All of them are saying they have a winning strategy and as long as you pay to learn then you will be benefited. I have never attended such courses. I am not sure whether the tutors really have a winning strategy but if I have one then I won't bother to organize courses. Superman Li never did that as far as I know. Nor did Buffet.

However, I do agree that there is a for sure winning way in investing. Am I self contradictory? Not really. Any one knows statistics must has heard about probability. As long as you can construct a trading system that has a success rate over 50% and you have a strategy to win at a reward rate higher than 2 times of the bet placed, over the long run you are bound to win. This is a guaranteed winning way. If you think such thing never exists in the world then you are damn wrong. In fact, it is never far away from us. All casinos know what it is about. It is the for sure winning system that makes casinos never lose in the long run. So to punters, gambling is a trial of luck but to casinos, gambling is a business, a business that never lose except the loss arising from poor business operation but never from hosting gambling table.

When there is really an ever winning way in the world then we, being investors, must learn how this winning way can benefit us. Many investors are keen in learning different kinds of investing philosophies like value investing, trend investing...and seriously study the methods of fundamental analysis and/or technical analysis in the hope that they can master something to beat the market. I do agree that those skills are important and useful. However, without an guaranteed winning system, most if not all, wins in the investing are kind of chance but not guaranteed.

Don't know who once said that investing falls somewhere in the spectrum between arts and science. I further refine the saying that the analysis part of investing is arts while the execution part is purely science. For example, the way to evaluate the value of a company is really an art although there are analysis methods seems scientific yet there are many subjective assumptions when doing the evaluation. Even the technical analysis has a lot of subjective assessment, like the way how to count the waves. However, when it comes to the execution part which means the trading system. It purely rests on the statistical reasoning. As what I put it in the earlier paragraph, as long as the trading system has a proven 50%+ winning probability and a return rate of 2 times or more, profit is guaranteed in the long run of investing. What we need to do is to construct a trading strategy that meets these two criteria and back test it with historical database.

So to me, winning in investing is all about a reliable trading system.You may say such system is too good to have one and wonder its existence. Yet I have it. Hope you can also build yours.


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