sounds like the economy to me :)

There are a lot of ways that a company can go under. All it takes is one mistake or one black swan event and what would have been an amazing investment 99.9999% of the time goes to zero.

They compared equal weighting, but did they also check market-cap weighting?

First they ran in simulation, not the real market. It may be that that act of being in the market changes the market enough to make your strategy work. (though typically it is the opposite - things work in simulation but applying them to the market makes them not work). As such this paper doesn't really tell us anything useful.

Even if we ignore the above, they only tested a few different strategies. That says nothing about any other trading strategy that someone might apply: any of them might work.

I still think day trading is a bad way to invest, but this paper doesn't prove anything even though it speaks to my bias.

Zero-sums game are actually proven to have a winning strategy.

Chess is a zero sum game.

Are you saying that someone who trades a small amount of capital is always winning an amount of money that is roughly equal (+/-) what the counterparty lost or vice-versa? That can be demonstrated to be untrue.

Are you saying that trades spanning a short period of time always win or lose an amount that sums up to zero for all participants? That also seems highly unlikely unless all participants are engaged in short term trading which is not true in practice.

At any rate, while I've heard this claim repeated often, I've never heard anyone substantiate it and as far as I can tell it doesn't really make sense.

There are financial instruments that are zero-sum by their nature with respect to dollars, for example derivatives and currencies are by nature zero sum with respect to dollars, although they are not zero sum if you factor in risk. But that has nothing to do with short vs. long term though. Equities are not zero-sum, long term or short term.

You're making a bet that Google will do better than everyone else thinks it will. And even more than that. You're betting that it will do so by a wider margin and/or with a higher likelihood than the available alternative investments you could make with that same money.

And even more than that, you're betting that Google will do better than everyone thinks it will and that the market will acknowledge this the way that you expect and the price will adjust accordingly in a time frame that is relevant for your investment goals and solvency.

The companies that have seen the largest growth, amid the longest bull market in history, have beaten everything else?

Isn't that pretty much a tautology?

In some sense I think this speaks more to the way that the US regulatory framework allows dominant players in a given market segment to retain and reinforce their dominance.

You can argue that these type of investments are "quality" or "safe", but the reasoning behind that label isn't going to be based on any kind financial analysis. There's no path to dethroning these giants or constraining them in any significant way, and as a result they're insulated from market fluctuations that might crash the price of a smaller player.

That's all without going into the feedback loop of safe investments -> more investors -> higher price (or price stability) -> upgraded safety rating -> algorithmic rebalancing of index funds -> higher price -> etc.

"if you were going to hunt for $20 bills on the sidewalk, which park would you go to? Central Park always does pretty well but if you were to play 'double or nothing' for tomorrow's find, you couldn't guarantee that you'd find a $20 bill there just because you found one there yesterday."

All else is never equal. If you change this experiment slightly, you'll get a more interesting result. If there is a $10 bill and a $100 bill on the sidewalk, and you have to choose one to take and one that will return to its owner, most people will choose the $10. The $100 seems suspicious and dangerous (in a "mystical and unpredictable" way.)

Quality is determined by experience and instinct. The personal valuation of a $100 bill might drop below $10 with no added information, other than that all treasure looks less like treasure than a lot of trash does.

Suffice it to say that if there were a market that accurately labeled the values of everything it sold, it wouldn't be a very interesting market.

> the FAANG index in which each company is worth at least $100 billion has pretty much beaten everything else since 2009.

That's because the politics are affected by size. To big to fail is real.

Where's the experiment part?