Changing a mean reversion strategy to deliver 30% annual returns since 1999

100% my reaction towards your comments as well.

> It's no wonder that you couldn't muster the intelligence to come up with any profitable strategy at all.

Studies have shown that over the long term, the majority of actively managed funds fail to consistently outperform their benchmark indexes after accounting for fees. With facts like these my intelligence says stick to index investing.

> Moreover, you go about confidently asserting and spreading your disinformation, attempting to brainwash others with your false beliefs and lies.

I am sharing commonly accepted knowledge. It is commonly accepted that buy low sell high trading strategies are like perpetual motion machines. This does not stop some poorly educated honest inventors from inventing them however. Con artists also “invent” them and offer them for sale or offer their expertise to help build one for yourself. Which of these you are I am not sure yet. Early on it can be hard to tell since a good con artist is subtle.

> Like I said, 25 is between 10 and 30. It depends what exactly the strategy's performance is, and we don't know what it is for various reasons. I look at it day to day.

You realize investments are not judged by returns but metrics like returns per risk such as sharpen ratio, sortino ratio, etc? If risk did not matter leverage can trivially multiply returns. TQQQ for example can look attractive till you realize a daily ~30% index drop wipes you out as happened with oil versions of such funds during COVID pandemic.

> You with your limited worldview are presupposing that all strategies work because others haven't found them.

Once a strategy is known, it gets rapidly arbitraged away as traders compete to exploit the inefficiency. Widespread adoption of a strategy changes market dynamics in ways that invalidate the original premise. Strategies that become crowded trades are vulnerable to severe losses if sentiment turns and everyone rushes to exit at once.

> That's not how they all work. Some work despite the fact or even because of the fact.

Yes! Pump and dump schemes and similar fraudulent trading strategies exploit popularity to manipulate markets. These scams often involve self-proclaimed "gurus" who heavily promote a stock or cryptocurrency, artificially inflating its price. They lure unsuspecting and inexperienced investors with promises of easy profits, diverting them from proven investment strategies like index investing.

The more popular and influential the guru, the greater their ability to temporarily move markets with their recommendations. In essence, the guru's predictions can become a self-fulfilling prophecy in the short term, as a herd of enthusiastic followers rush to buy the promoted asset. However, this popularity is manufactured and fleeting.

What the followers don't realize is that the guru has already quietly accumulated a position beforehand at a much lower price. As the guru's devotees drive up the price by buying en masse, the guru sells their holdings at the artificially inflated prices, pocketing significant profits. The asset's price then collapses, leaving the guru's followers with substantial losses.

In this way, pump and dump schemes enable unscrupulous individuals to exploit the trust and capital of unsophisticated investors. Regulators are increasingly cracking down on these scams, but they remain a persistent problem, particularly in lightly regulated markets like cryptocurrencies. Investors should be highly skeptical of "get rich quick" trading tips, especially those popularized by social media influencers or self-declared experts promising unrealistic returns.

> Wrong again. Professional traders specifically discard such retail noise, although I suppose it could be used in certain contexts.

So why do some professional traders pay to trade with retail order flow? They pay for it so They can “specifically discard such retail noise”?

Obviously not. Professional traders try to exploit retail order flow by "front-running" - getting in front of large retail orders that are likely to move the price. If they can buy right before a large influx of retail buy orders hits the market, they can then sell into that buying pressure for a quick profit. Order flow can also give a view into where retail traders are placing stop-loss and limit orders. Professional traders can use this to their advantage, triggering stops or fading popular limit order levels.

> The number has no basis in any zero sum game; it is whatever the buyer last paid.

Stock trading can be considered a zero-sum as one trader's gain is another trader's loss. When someone buys a stock and the price goes up, they profit, but the person who sold it to them missed out on those gains. Conversely, if the stock price goes down, the buyer loses money while the seller avoided those losses. On any gi rn day of trading the total wealth of all participants remains the same, with money just changing hands between them.

In the long run however stock trading is actually a negative-sum for traders.

Traders pay fees to brokers, exchanges, and other intermediaries for executing their trades. These costs eat into the overall profits, making the total wealth of all participants decrease over time.

There is typically a small difference between the highest price a buyer is willing to pay (bid) and the lowest price a seller is willing to accept (ask). This spread represents a loss for the overall market, as it's a cost that doesn't contribute to any participant's profits.

Time and resources devoted to trading could have been used for other productive activities, such as starting a business or investing in education, which could have generated wealth for the overall economy.

> If your lies were the truth, bitcoin wouldn't exist, and gold wouldn't carry value either.

Tell me why are prices rarely advertised using gold or Bitcoin? Might it be because these are speculative assets rather than currencies. If they were widely accepted as currencies, you would see prices consistently posted using units of gold or Bitcoin. However, this is not the case due to their highly volatile value, which is a result of the lack of active supply management.

The primary purpose of a currency is to maintain stable prices while discouraging the hoarding of the currency itself. This is achieved by controlling the money supply to maintain a small, consistent rate of inflation.

When excessive debt accumulates in the economy, inflation may be strategically increased to help clear that debt.

This is a fundamental aspect of how modern monetary systems function, and it is well-understood by those with an education in economics. There are no surprises here.

It is generally unwise to store wealth using a fiat currency for extended periods, as it is not designed for that purpose. Instead, the main objective of a fiat currency is to facilitate transactions and promote overall economic health. Other investment vehicles, such as real estate, stocks, or bonds, are more suitable for long-term wealth preservation and growth.

> Gold was used as a currency for thousands of years, also by the Romans and by the US with a gold-backed dollar.

Societies used to not care much about washing and keeping clean for thousands of years. For this reason we should go back to that? The fallacy in this argument is an appeal to tradition or appeal to antiquity. Just because something was done a certain way for a long time, does not necessarily mean it is the best or most appropriate way to do things now.

> Anyway, as a user of money, I couldn't care less about the destructive agenda of economic growth.

Economic growth today is essential for creating a better future for coming generations. By expanding productive capacities, raising living standards, and spurring innovation, we lay the foundation for a world of greater prosperity and human flourishing.

Growth enables critical investments in education, research, and governance that pay long-term dividends. We have a moral obligation to be good ancestors by supporting economic dynamism. While some argue growth is unsustainable, it is actually the key to developing the technologies needed for both abundance and sustainability.

>> Countries are "owned" by their voters.

> Countries are owned by those with the money.

Indeed spending choices are votes that shape the economy. Every purchase sends a signal to producers about what to make more or less of. Money is not just for transactions, but a voting system that guides the market based on consumer preferences.

Collectively, our financial decisions determine which businesses succeed or fail. Each dollar is a vote for the type of world we want. So daily purchases, while they may seem small, wield power in creating the economic reality we all experience.

> We are done here. I do not desire to continue a conversation with someone who unquestioningly peddles whatever untruths they've been taught without regard for the actual truth.

I expect there may be others that think as you do and I hope our conversation helps them. Thank you for being my foil!