The level of discussion that HN is a good medium for has absolutely no bearing or causal relationship with whether or not the actual stock market is normally distributed.
Imagine really thinking that the nature of a discussion forum can somehow influence the distribution of stock prices, as if stock prices examine comments on the Internet to determine their behavior.
I dont have a dog in this hunt but that seems like a strangely aggressive response. Perhaps the comment meant nothing more than that plaintext HN is a difficult place to start having a discussion that really requires some mathematical machinery, and therefore, since we cant throw around sigmas and integral signs here, we will make some assumptions.
Attacking the comment with sarcasm isn't in the spirit of HN even if you think that is a dumb idea.
>I dont have a dog in this hunt but that seems like a strangely aggressive response.
Well I do and as someone who has seen his other posts on this subject as well, he has a tendency to try to dismiss differing points of views on the basis that he has 20 years of experience and knows better than everyone else but can't be bothered to explain it.
Someone who has experience and wants to flaunt that experience should do so by coming up with good arguments, pointing people to good resources, and making a good effort to inform rather than pulling rank as a way to dismiss the conversation under the guise of sophistication and pretention.
I too have decades of experience working at a quant firm, and guess what... many people who post on HN have subject matter expertise and frankly I don't think many of us would agree with the idea that the stock market is normally distributed, or that you need a great deal of mathematical machinery and sophistication in order to demonstrate that fact.
Math models reality, reality does not model math. Whether or not stock prices or portfolios, even the portfolios of those on Hacker News, follow a normal distribution has nothing to do with the nature of the discussion of those portfolios.
Also, policing people's tone is also against the spirit of HN as well, but here we are. If you want to police how I speak, flag my comment and/or downvote it.
The meaning of quantitative changes a bit with time and context.
I would say the more "bayesian / sell side / derivative pricing" kind of meaning exists since the late 70s, the more "frequentist / buy side / let's hire 100 physics PhDs" meaning came prominent in the early 2000s. (as a general feeling).
> he has a tendency to try to dismiss differing points of views on the basis that he has 20 years of experience
I surely will concede I have this tendency, now you have to keep the context in mind. You are on an internet forum focused on CS, and emerges a comment thread on personal investments. The very subject of this thread is whether it makes sense to consider risk adjusted returns or just any kind of returns for your investments.
My argument is based on the fact that risk adjusted returns should be used, and you should assume normal distribution. I am not saying this is a law of nature, but rather that this is a fine and widely used assumption for both practitioners and academics, which allows the argument and explanation to go further without entering an experts debate (like you are trying to start).
So I stand by what I said: for all intents of this discussion, assuming normal distribution should be a given. If you want to dance around it and demonstrate that a students distribution or whatnot is a better fit, go ahead. I think this is more armful than helpful here.
> try to dismiss differing points of views on the basis that he has 20 years of experience
I think this is important on the contrary. What is lost on a forum like HN is the context of people answering comments. When someone comments "I don't think risk adjusted returns are important", it makes a hell lot of a difference if it's just the opinion of a random guy, or someone with actual experience.
Now while it takes 1 sentence to wrongfully dismiss a scientific fact, it can take 100 pages of an expert to prove that it's true. Look at a proof that 1+1=2.
That is where credentials are important IMHO. Some debate tengents are not interesting in a discussion, and will only lead to an expert explanation serving no purpose other than confusing a reader, and making the expert proud of himself. In these situations, just stopping the tengent is the best reaction IMHO.
So I apologize if you take my comments as dismissing, but try to assume good intent. When someone asks why you should use risk adjusted returns to compare investments, I think the saner thing to do is to tell him to assume normal distribution, because that's the far more likely scenario, most of the research do take this overall assumption, and you can proceed to the demonstration that makes sense, which I showcased in my previous comment about 10% returns on 10% annual vol versus 5% returns on 1% annual vol.
To re take the example I posted above, when the discussion is about 1+1=2, I don't think you're doing any good contradicting that it doesn't hold on Z/2.
Assuming normal distribution of returns is a pretty standard base for comparing investments. It is a base shared by many models and metrics. Sharpes don't make a lot of sense on non normal distributions, mean variance optimization either.
Modeling (and possibly economics, especially) is rife with simplifying assumptions that break down in practice. You can find many economists who think modeling individuals as rational agents is a "fine and widely used assumption" while also finding many economists and psychologists showing where this assumption can get you into trouble. There is a big difference between "this assumption is made because it reflects reality" and "this assumption is made because it makes my life as an economic modeler not suck." The latter is still fine, but only if you're upfront about its limitations.
Imagine really thinking that the nature of a discussion forum can somehow influence the distribution of stock prices, as if stock prices examine comments on the Internet to determine their behavior.