Everybody will tell you that stock investing is a great idea because it's been back-tested by some serious guru and if you had bought one share of some stock during the Revolution you would now own the GNP of some banana republic. But you forget that your back-testing is only on stocks that are alive today and does not cover stocks in imperial Russia that a rational investor would have bought at the beginning of the century. Many continental stocks were recycled into wallpaper. When you look at markets you are only looking at the remnants, the parts that have survived. Or take real estate.
People always say it goes up.
But that works only if you always bought in places that became fancy. So essentially, you'd like to replace statistical valuation that's at the center of most derivatives trading with valuation that's more based on experience. What they give is generally worth less, and what they take is worth more. It's sort of like cars that are lemons. When you buy a lemon, only the seller knows it's a lemon.