Early Retirement Extreme Forums

@jacob in here:

You can then ride the other market players as well. This means that if you're a little fish, you really need to understand the big fish as well or better than they understand themselves---since there are too few big fish for statistics to provide a decent model (the population size is too small), statistics is not the best tool for this. If you're a big fish you just need a lot of money or influence. Ponder this until it sinks in.

What such tools people here have? I would think fundamental analysis in the world of investing.

Otherwise, perhaps reading biographies, I am also thinking along the lines of qualitative social research such as content analysis, interviews etc (as opposed to quantitative analysis i.e. statistics).

It helps to consider what constraints the big fish are under, and game out their corresponding actions.

An old example. In the dot.com boom of the late 90s, everyone was shoveling money into tech mutual funds. The fund managers had to invest that money, or not be a manager. Even if they knew better, it was more beneficial for them to just go along with everything. As long as everyone else went down at the same time, they couldn't be to blame.

Right, so the fund managers were the big fishing riding the sentiment because they had to, and so reinforcing the boom. Small fish, realizing the constraints of the funds managers (have to move the money), could ride it and exit in time. Knowing when to exit in time was knowing when the fund managers' movement away from the dot.com stock was bound to happen.