Insulting Consulting

The fallout from my post that was intended merely to express my opinion that a lot of mainstream financial articles are filler articles rather than in-depth articles with any value, and that investing in (cheap) index funds is a better long-term investment strategy than (expensive) managed funds continues. Prabhat writes:

By 'bad' I simply meant your reference to the fact that most hedge-funds under-perform the passive investing alternative.

I never mentioned the performance of hedge funds. I was talking, quite clearly for once, about managed funds in comparison with index tracking funds.

Hedge funds aren't intended for the likes of me, as they: 

are most often set up as private investment partnerships that are open to a limited number of investors and require a very large initial minimum investment. Investments in hedge funds are illiquid as they often require investors keep their money in the fund for at least one year.

Prabhat continues:

As far as better analysis is concerned, what I mean is that some people will be better at analyzing data at the end-of the day than others. True, some financial data will reach big players before others and thus be 'old', but unless those big players are analyzing it perfectly, the fact that they get data in advance isn't going to result in the market automatically 'digesting it'. 

I think the probability of the big players somehow all missing or misinterpreting some key data is small. It's also not 'some' financial data will reach the big players before others, it is 'almost all' and none is going to reach me first. That is the reality of it.

In sporting terms, it's like a tennis layer wins a set with an overhead smash. For the man at home to benefit from that point, it needs not just one court-sider to make a mistake, but for all the others present to make the same mistake (from what I am reading many matches have several court-siders trading the same match). Possible in theory, but really rather unlikely in practice, at least in frequently traded companies / major ATP/WTA events.

Prabhat finishes with something we can both agree on:

As for high-frequency trading, that can't really be called analysis in any sense, and while it highly complicates, if not kills, day-trading, I don't understand why someone with a longer time-frame and good analysis skills would be incapable of doing well.

There is a 'Tennis Trader Glossary' of terms at the start of Game Set Ca$h which includes this entry for a court-sider:

A consultant who transmits live scores from the court-side to their back end or a computerised gambling system to take advantage of the time delays experienced by the rest of the online gambling community.

Having worked as a 'real' consultant myself for many years, the use of the word in this context is problematic to me. The dictionary definition of a consultant is:

a person who provides expert advice professionally.

I'm not sure updating scores by pressing buttons fits into this category.