Quote:
Originally Posted by Cali Coug
Come on, Jay. You know better than that. What is the margin of error of the polls being combined? Is it the same in each? If not, how do you weight one over the other? Can you be certain each used the same methodology? Do you have any idea if the polls are at all comparable?
In a mutual fund, you are hedging against the chance that one stock fails by diversifying the portfolio. In other words, you are going to get some crap stocks and some good stocks (you hope, though that isn't guaranteed either). Why would you expect a combination of polls to be more "accurate?" It may hedge against bad polls, and it may include some good polls. Or they could all be crap, or they could all be good, and averaging them could dilute the influence of the "right" poll.
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If you knew which one was right, you wouldn't have to have an average, but you don't. Just like if you knew which stock was "right", you wouldn't need to dilute it by averaging it with other stocks in a mutual fund.
If the polls have reasonably similar methodology and all have reasonably credibility when it comes to accuracy (I don't know if they do but assume they do), then averaging them gives a better chance for accuracy than any one poll by itself.