Compared to the average quantitative analyst, I am unintelligent. To be more accurate, I should say I am less experienced and educated; I believe myself to be of equal innate intelligence and discipline but several years to the left of their capabilities on a time line. The confidence I have in my intellectual faculties might be hubris, but for now I am concluding that it is not unfounded.
Given my current stage in intellectual maturity (intellectual adolescence?), I must admit to myself that, in all likelihood, my efforts at trading will presently be unfruitful (as they have been in the past). I am developing my mathematical skills, but they still lag behind; I read much on history (not only economic), but it is likely to be insufficient at this point. Furthermore, the vast majority of academics — who are also more educated and experienced than I am — assert that trading is a ill-advised adventure; You can not beat the market, you can only take on more risk. Some traders may appear successful, but they are just the lucky ones who happen to land on the far right tail.
So where does this leave me?
I respect (highly) the elegance of modern portfolio theory. A sizable part of my mind has already concluded that it is far more rational to build long term portfolios than to pursue the path of active trading. This is the same part of my mind that gets angry when people buy $29.00 in lottery tickets as I wait to buy my pack of Tear ‘n Share Peanut M&M’s.
On the other hand, I am wary of the conclusions drawn by the academic field concerning the efficient market hypothesis. The majority of studies make heavy use of long term historical price sets; I do not believe that valid inferences can be drawn on these data. Given my own experience, I believe this type of study suffers from, at the same time, too much and too little information.
Furthermore, the reptilian side of me that not only is overconfident but also craves the stimulation that trading provides, still harbors the illusion that I can be a successful trader. I have been interested in investing err, speculation) since I was very young — around five to be precise. There is nothing I enjoy more.
So, probably foreshadowing failure, I choose to stay the course because I believe in my own abilities and am skeptical of the conclusions of the EMH; I am relatively unintelligent but I believe myself to be more capable then those above me.
This does sound like hubris, no?
