professionals and amateurs
My company had a meeting today with the insurance company that provides our 401-k plan. I hate these, because all I can think of is how I would rather live in Sweden and not have to deal with this.
The sales people from the insurance company were quick to point out that it is a bad idea to rely on government and the social security it offers. Most people seemed to find that a compelling argument; I thought it was retarded. Isn't that the whole point of a democracy, that you elect the government that does what you want? Of course if everyone who has the option of evading the effects of lack of social security does so, it's mere self-fulfilling prophecy that social security will be insufficient or gone. Surprise! Imagine that: In a world were most people are incapable of changing the oil in their car we are going to do financial fund administration ourselves?
By the time they opened the floor for questions, my supervisor BlondKiwi was already taking bites out of them for the fact that the mutual funds they offered were not listed on the stock exchange. So I served up BlondKiwi one of his pet peeves, namely that spiders and index funds outperform fund managers on a regular basis. The financial representative hemmed and hawed, but offered to compare the performance of the funds our package offers to spiders and index funds that we are interested in, so I emailed him the list of those that I had been tracking.
It was for the first time, though, today that it occurred to me that this whole issue is a pet-peeve of BlondKiwi on two levels: There is the fact that the majority of funds are too lackluster and the "fund manager of the year" have way too few repeats to give anyone the impression that what they are doing is more than blind chance (clearly someone is always fund-manager of the year); in his book Empirical Methods for Artificial Intelligence, Paul Cohen observes that this was the reason he did not do his PhD thesis on building artificial fund managers. But more fundamentally, this dichotomy between knowledge and heuristics, between what we think we know and what we could only statistically derive from significant amounts of data is precisely the research issue that BlondKiwi always chastises us for. The world is awash in good ideas and great plans; but do you actually have the statistically significant data to show that it is going to improve anything? Many things sound great; many people try hard. The question remains: Can you show the impact?