Comments on: Does the “wisdom of crowds” produce alpha? http://allaboutalpha.com/blog/2008/02/10/does-the-wisdom-of-crowds-produce-alpha/ A finance blog about hedge funds, portable alpha and alternative investing. Thu, 09 Feb 2012 19:03:08 +0000 http://wordpress.org/?v=abc hourly 1 By: Monday links: double dose of fees « Abnormal Returns http://allaboutalpha.com/blog/2008/02/10/does-the-wisdom-of-crowds-produce-alpha/comment-page-1/#comment-82204 Monday links: double dose of fees « Abnormal Returns Mon, 11 Feb 2008 17:32:26 +0000 http://allaboutalpha.com/blog/2008/02/10/does-the-wisdom-of-crowds-produce-alpha/#comment-82204 [...] Is “collective money management” a fad or an enduring model? (All About Alpha) [...] [...] Is “collective money management” a fad or an enduring model? (All About Alpha) [...]

]]> By: Walt French http://allaboutalpha.com/blog/2008/02/10/does-the-wisdom-of-crowds-produce-alpha/comment-page-1/#comment-82188 Walt French Mon, 11 Feb 2008 16:26:34 +0000 http://allaboutalpha.com/blog/2008/02/10/does-the-wisdom-of-crowds-produce-alpha/#comment-82188 <i>it would be against the investor’s self interest to share his stock pick before he actually executes the trade.</i> When I play poker, I am a lot more cautious about betting against the guy with lots of chips stacked up; I'm quite happy to bet against the guy who has frittered away all his starting cash. Ditto here. Given the exceptionally low signal-to-noise ratio of these very small trades, why wouldn't you want to take the other side? Heck, the CW is that clients of the Schwabs of the world do such awful trades that brokers are willing to pay Schwab a couple pennies per share to take the opposite side. it would be against the investor’s self interest to share his stock pick before he actually executes the trade.

When I play poker, I am a lot more cautious about betting against the guy with lots of chips stacked up; I’m quite happy to bet against the guy who has frittered away all his starting cash.

Ditto here. Given the exceptionally low signal-to-noise ratio of these very small trades, why wouldn’t you want to take the other side? Heck, the CW is that clients of the Schwabs of the world do such awful trades that brokers are willing to pay Schwab a couple pennies per share to take the opposite side.

]]> By: Risk and Return » Does the “wisdom of crowds” produce alpha? http://allaboutalpha.com/blog/2008/02/10/does-the-wisdom-of-crowds-produce-alpha/comment-page-1/#comment-82151 Risk and Return » Does the “wisdom of crowds” produce alpha? Mon, 11 Feb 2008 14:28:14 +0000 http://allaboutalpha.com/blog/2008/02/10/does-the-wisdom-of-crowds-produce-alpha/#comment-82151 [...] AllAboutAlpha asks if the wisdom of crowds produces an alpha? Too soon to tell, though his thoughts on why it isn’t really a wisdom of crowds approach seem dead on to me. [...] [...] AllAboutAlpha asks if the wisdom of crowds produces an alpha? Too soon to tell, though his thoughts on why it isn’t really a wisdom of crowds approach seem dead on to me. [...]

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