Pundits, Coin Tosses & Typing Monkeys

There is a famous broker story, probably apocryphal, that makes the rounds every few years as though it had just happened. It goes like this: a new, struggling broker buys a mailing list of 10,000 potential prospects. They then write two separate newsletters about the same, high beta stock. One newsletter advises a leveraged short of the stock and is sent to half of the list or 5,000 prospects. The other newsletter suggests a leveraged buy of the same stock, and is sent to the other 5,000. A month later, the prospects that got the newsletter touting the wrong side of the trade are discarded. The 5,000 that were on the right side are split into two groups and the same process is repeated with a different stock. At the end of four months, the broker has a list of 625 prospects who can’t believe their luck in finding the next Michael Burry, and will spend the next ten years wondering why, after they transferred their life savings, the magic disappeared.