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Christoph Franck
08/20/12 05:06
Read: 531 times
Sindelfingen
Germany


 
#188099 - Biased sample selection.
Responding to: Richard Erlacher's previous message
Richard Erlacher said:
Some people believe that one can manage his retirement resources better than the government can. To some extent, that depends on the government in question, of course, but everyone I know, who has a substantial net worth, tells me that nobody, no professional nor any amateur, can manage your money better than you. After all, if YOU manage it, it being YOUR money, you won't do anything ridiculously risky, right?


Not intentionally. There is still plenty of opportunity for doing risky or even downright unprofitable things, since no one has perfect information to base their decisions on. (Unless, of course, you stick with investments that are universally known as being safe, and watch your money being devalued by inflation faster than your investments appreciate.)

Also, the group of "everyone I know who has a substantial net worth" basically excludes people who a) manage their finances themselves and b) are bad at managing their finances themselves. This sounds like a classical example of a selection bias.

The more realistic statement I've heard is that you have a 50% chance of performing better than a "professional", meaning that on average, there's fairly little point in paying for a professional.

List of 30 messages in thread
TopicAuthorDate
Salary System      Arif Deshmukh      08/10/12 23:08      
   "System"?      Andy Neil      08/11/12 08:04      
      Govt. System      Arif Deshmukh      08/12/12 00:00      
         Perhaps it's just another "bump in the road" for India      Richard Erlacher      08/12/12 07:54      
            Here is another bump      Arif Deshmukh      08/13/12 04:19      
         In The U.S.      Neil Kurzman      08/14/12 18:25      
   yeah well.      Jez Smith      08/14/12 02:18      
      Oh! Means I Am Lucky      Arif Deshmukh      08/14/12 04:37      
         Also        Jez Smith      08/14/12 10:10      
            We don't do it willingly ...       Richard Erlacher      08/14/12 11:26      
               Very Strict In India      Arif Deshmukh      08/15/12 01:09      
            yep      Andy Peters      08/17/12 15:30      
      You Make it sound like a bad thing.      Neil Kurzman      08/14/12 18:32      
         Cube covering      Rob Klein      08/15/12 03:52      
            I don't remember even one "cubie" that wasn't padded      Richard Erlacher      08/15/12 18:07      
            No Padding      Neil Kurzman      08/16/12 13:40      
      Not if your company follows this advice      Andy Neil      08/23/12 12:28      
         male cow manure      Erik Malund      08/23/12 12:38      
            wow      Neil Kurzman      08/23/12 20:57      
   New Zealand working conditions      Bert Van Den Berg      08/17/12 12:40      
      Here in the U.S.      Richard Erlacher      08/17/12 13:37      
         No Pension      Arif Deshmukh      08/19/12 22:03      
            Well ... there are those who believe ...       Richard Erlacher      08/19/12 23:21      
               Biased sample selection.      Christoph Franck      08/20/12 05:06      
                  You've overlooked the inherent bias ...       Richard Erlacher      08/20/12 11:21      
                     Paying for professionals.      Christoph Franck      08/21/12 01:39      
                        That's very much the case       Richard Erlacher      08/21/12 09:16      
            Arif: Which govt are you referring to?      Kalpak Dabir      08/20/12 04:50      
               BMC      Arif Deshmukh      08/20/12 10:16      
                  What would trouble me ...       Richard Erlacher      08/20/12 11:35      

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