This paper by Joshua Della Vedova looks at the returns of retail traders, i.e. non-professional financial investors. How useful is it to have to ability to forecast asset prices correctly? Surprisingly, even traders who have a better than random ability to forecast lose money, while those making near-random bets can profit through superior execution. In this context, a big part of superior execution is simply speed: Automated trades by bots, because they are faster, are more likely to make money than casual trades.
The paper is about financial trades, but the principle extends to life more generally: Being right is often less important than getting things done. It’s a difficult lesson to learn for this scientist.
I came across Della Vedova’s paper through a post by Tyler Cowen on Marginal Revolution.
Nehaveigur 