Thursday, December 20, 2007

No Skill and No Opportunity = No Value-Added.

Richard Grinold once showed that:

He meant that a manager’s value-added (Information Ratio) was a function of his selection skill (Information Coefficient) and the number opportunities (N) he had. In other words, no skill = no value-add and no opportunity = no value-added.

During the holiday season the markets are thin and small trades can create a lot of price movements. In this environment I have no skill and little opportunity to add value. Blogging will therefore be very light and I will back in the New Year.

Happy Holidays and Happy 2008!

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