1. One Guy only makes $$ in a down market 2. Other Guy makes $$ in a flat/volatile market They can both track the upside relatively close to the SP500 Who would you hire or invest in?
well....if they have an edge you should be indifferent between the two but taking into account your risk preferences, then you should decide based on that. I cant see why steve will disqualify either one of them if they are profitable.
Just preference. Good professionals will find a way to adapt. The fact that these "hypothetical" traders cannot find a solution for a particular type of market suggests a problem that isn't easily fixed. Also it is important to note that one cannot tell in advance what kind of day a market is going to have. Therefore in any given year either or both of these traders may be exposed to market conditions that cause them to drawdown signficantly. If I am managing an office, I want to be able to quantify my risk a little better than that. While it may seem counterintuitive, the fact is, its not that difficult to find and hire traders who manage all kind of markets well.
Did you meant a flat or volatile market??? Simply, if the markets is flat...its not volatile. Therefore, you show two options when you should have shown three options. With that said, it really doesn't matter what markets the money is made in. In addition, do you realize that a bear market or bull market can be volatile??? Simply, if you are going to try to define the types of market conditions that a trader is more profitable within in comparison to other types of market conditions... You should learn and understand the different types of market conditions that exist. Regardless, what matters is that the trader has the ability to recognize the different market conditions and not trade in the types of markets he/she does poorly in. Mark