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> The question isn't whether VCs are brilliant according to some absolute metric. The question is whether they deploy capital better than random chance. The num
by fweespeech 11y ago
> The question isn't whether VCs are brilliant according to some absolute metric. The question is whether they deploy capital better than random chance. The numbers show that top ten VCs consistently do.
Does it?
If you have enough gamblers in a high stake casino where the house hasn't stacked the deck, some of them will seem to consistently win in comparison to the other players.
Similarly, a very small percentage of VCs and other active investors consistently beat the market. A percentage so small I'm not sure anyone can statistically say they are doing so through skill.
Similarly, your argument is the top 10 are consistent. Yes. And the top 10 aren't a statistically significant sample in a market of thousands of investors.
- coffeemug 11y agoThis analysis breaks down if the top ten outperform the market after you've started watching them. If that's the case (which for top ten VCs it is), the math suggests it isn't a "million quarters" situation.
- msellout 11y agoThat would need to hold for substantially all of the "top" outperforming our expectation of a naive person with the same deal-flow.
- tremguy 11y agoThis.
- fweespeech 11y ago> This analysis breaks down if the top ten outperform the market after you've started watching them. If that's the case (which for top ten VCs it is), the math suggests it isn't a "million quarters" situation. Actually, it doesn't. The top 10 VCs aren't static and unchanging.