[valdiorn]

> Say I'm right 70% of the time, then I can equal weight my bets and it will be just swell. But say I'm right about 51% of the time. Then it's going to take quite a while longer for the law of large numbers to work in my favour.

That's actually very far from being true. If you trade a single instrument, sure, the variance will kill you in anything but the very long run. But if you trade thousands of securities (like say, the entire US equity market), then a 55% prediction ratio and a market neutral strategy will absolutely crush. Even if you blindly buy/sell on every signal without doing any sort of weighing (excluding low confidence predictions, etc), then you should see a several sigma strategy.

It only takes a very, very small edge to make a very low risk strategy if you can diversify.

https://en.wikipedia.org/wiki/Signal_averaging

Now add on top of that the fact they will have several low SNR prediction signals, and the effects of signal averaging become even greater

I'm also a "quant fund insider", as you put it...

[lordnacho]

Yes, Taleb did the actual calculation in one of his books. I'm exaggerating because if I say it's 50.01% it will cause head scratching.