Clive:
There are many analysts each studying individual shares working 70 hours a week doing so looking for a 0.1% edge (50.1 : 49.9)
Are you suggesting that they are AIMers that do this on the starting CERs of AIM Start-up? I doubt very much that there are any AIMers doing that. We must be talking about different animals.
With AIMers typically trading from time periods from days to weeks and months I do not see what computer trading in the nanosecond range has anything to do with the issue. Name me and AIMer other than you and I that knows what a nanosecond is!
What you buy someone else sells, what you sell someone else buys. Generally when it seems like you might be buying something cheaply it may be that the seller is happy to take a small loss on in order to insure against a potential lager loss and you're in effect taking on that large loss/small gain risk/reward.[/]
That's the name of the game for which most of us like follow Tom Veale's point of view:
"We buy from the scared and sell to the greedy"
How can you pin the 50/50 as optimum starting SER Claim for AIM Start-ups on this? AIMers represent a very small percentage of investor so they are not representative of the word-wide average investor anyway, but in saying this I have no idea if this has any relevance to the question as to what the optimum starting CER for a new AIM Portfolio should be. I would even dare to bet that even today AIMers do not start their new Portfolios with a 50/50 SER even though many of them they half read your statements about 50.50 being the best. . .but I would not dare to bet very much. . .the little spare money I have I want to send otherwise. . .maybe even foolishly, like a motorcycle journey around parts of the world.
Yes I do think yields +/- in a coin flip like manner. But rather than being like a simple single coin-flip emulation, with stocks its more like having two coins. One that is flipped at regular short intervals and adjusts prices up or down by small amounts in quick succession, and the other coin that flips at random intervals, sometimes with long periods between each such flip - sometimes in quick succession, and that adjust prices up or down by much larger amounts.
I do not see the parallel mechanism you are proposing that drive the outcomes.
As long as you keep flipping coins on whatever frequency the following would apply, assuming that a coin flip of 1 means the price is has risen and a 0 means the price has dropped:
1 Depending on the type of coin you might use, if you use a coin with a flat edge between Head and Cross you can expect some flips not to result in an answer. . .the coin ends up on its edge. . .an in determinant result . . real stocks always have price)or profit) as long as the company behind it has not been declared bankrupt. . even a price(profit) of 0 is a price(profit).
In AIMing we had 3 fundamental possibilities:
price rises
price stays the same
price drops
Coins usually have two. . . and that is so if you use a theoretical coin that has no edge. . .like a "coin flip" generated in a computer program. I assume you are also referring to theoretical coin flips.
2 How do you model a price that stays constant with a coin flip?
3 When a company goes bankrupt some people end up with a loss and some with a gain but after that the price(profit) remains constant . . . noting changes. . .this would be like coin flipping and every result becoming indeterminate. . . nothing changes. In coin flipping you can not present sudden events like bankruptcies. . .you have no idea when they are going to happen.
Therefore you argument that the REAL investment yields in a world wide market can be modelled by flipping coins does not sound convincing and it certainly does not seem to related to selecting the best value for the starting CERs for AIM Portfolio's in real cases in which market information is available for making decisions on that question.
I am not yet a believer in the 50-50 CER Religion.
