Being Right 80% of the Time is no Guarantee for Success

Some investment schemes have a surprising degree of accuracy, and it is easy to think that this means that such schemes are sure fired ways to success. However, high success rates are always accompanied with modest returns and correspondingly large losses when they occur.

Being right 80% of the time will not end well if the losses during the other 20% far outweigh the gains during the 80%.

In the end, the casino always wins. The only sensible investment strategy for the little guy is to make long term investments based on simple metrics such as P/E ratios and the Dow-Gold ratio.

If you absolutely have to pick individual stocks, stay away from debt laden industries, dying technology, and stuff that you do not understand.

By Ralf Roletschek - Own work, CC BY-SA 3.0, Link