So, how can any one keep saying that a Starting CER 50-50 is the best for all cases while that is obviously not true, for in all cases some people know more than others?
I think it is a matter of distinction. Obviously if you have access to inside information and can use it, that puts you at a distinct advantage over someone who doesn't have it. Which is why they attempt, at least, to restrict on how inside information can be used. I don't think that anyone's claimed that 50/50 is the best in all cases. Rather it's a ratio that's reasonable for most people to start with.
We could break it down thus into 4 outcomes of 50% of the 50%
25% best ratio - AIM works to maximum effectiveness
25% so-so ratio - AIM works moderately well, producing some gains overall.
25% so-so ratio - AIM at best matches B&H or incurs a slight loss over the period.
25% - horrid - stock turns into a deep diver and you either sit on a huge loss or take it.
Now, those fairly equal probabilities ( at 50/50) will be skewed somewhat by the ratio of cash and equities. A stock that is going down with either of the last two options obviously may fare better with a larger starting cash amount. In the inverse, one would do better to start with less cash.
Again the problem is that we can't know in advance which of the four outcomes is the most likely. So a 50/50 may be considered something of a hedged bet.
Best,
AIMster
