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But don't you think his clients know that? If I'm buying fire insurance, I expect to lose money on it. I'm not betting on my house burning down, I'm just limiti
by fauigerzigerk 11y ago
But don't you think his clients know that? If I'm buying fire insurance, I expect to lose money on it. I'm not betting on my house burning down, I'm just limiting the impact in the unlikely event that it does.
Now, if your point is that Taleb doesn't explain it that way, you are right. But the only astonishing thing about this is that the WSJ deems it worthy of reporting that put options have gone up a lot when the market went down a lot.
- Animats 11y ago"But don't you think his clients know that?" Hedge funds, as a class, underperform the market; the "2 and 20" fee structure eats most of the gains. Yet many "qualified investors" buy into them.
- fauigerzigerk 11y agoThat supports my point that many hedge funds are being used as insurance by institutional investors who make their money elsewhere. Putting the fees aside for a moment, I think that hedge funds as a class can be expected to underperform long-only funds during a years long rally.