The only case where a completely random strategy works is if there are black swan events occurring at equally random intervals. I agree on the buy-and-hold index fund advice.
> The only case where a completely random strategy works is if there are black swan events occurring at equally random intervals.
It depends on how you define "works". A random strategy doesn't work at all on average, it can only be said to "work" for the 1/2 of the investors that by chance fall above the average.
And a random sequence is by definition a series of black swans. Unless you're saying that a black swan can only be an extraordinarily unlikely occurrence, in which case all we need do is wait a little longer for the improbable but eventually certain outcome that will meet anyone's definition of black swan.
There are 23 people in a room talking. Pretty quickly two of them realize they have the same birthday. Is that a black swan? After all, there are 365 1/4 days in a year -- how unlikely is it for two of 23 random people to have the same birthday? Is it 23 / 365.25 (6.2%) or is it more or less likely?
My point? Not all apparent black swans are really black swans.
