Tuesday, October 17, 2006

Financial experts

Here's an interesting review done by Ramit on Performance chasing and Market timing , a chapter from the book: Boglehead's Guide to Investing. I really liked this part which is as below:
Patri Friedman has written about a scam (....) "There is a particularly clever scam," he writes:
Get a list of email addresses of people interested in sports betting. Say you have 32,000. Email 16,000 of them to say that the home team will win this week's big team, and 16,000 to say the home team will lose. Now, half of the people will have gotten the correct prediction, and the next week, you do the same thing with them. After 5 weeks, you'll have 1,000 email addresses of people who have seen you pick the winner five times in a row!. Now you pitch your 1-900 number or paid email list subscription to this amazed group.
The amount of faith we put in financial "experts" who actually may not be very good at predicting the future is frightening. And so it's a good idea to do some study on your own and take responsibility for yourself!

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