Good points. I ought to clarify: back to the idea of rebalancing. It is really about checking your assumptions and trimming your sails a few times a year. As t

Good points. I ought to clarify: back to the idea of rebalancing. It is really about checking your assumptions and trimming your sails a few times a year. As to fund managers: i think that is the case with mutual fund managers. But it certainly isn't the case with hedge funds or VC. VC for example guarantees you will lose money uness you chose a handful of funds whose identity you know a priori. As for hedge funds--they cover a broad church--of which two remain specially interesting: Special situations/global macro -- where you need to know and understand a manager (who is essentially a business man) and find someone who has decent risk management in place as well as a really good investment process.I like Paulson for this. The second interesting area is the the high frequency systematic trading if highly liquid instruments (CTAs, if you will) which have a very different risk/return profile especially in chop markets and actually have a distribution benefit. Eaten alive isn't very precise--you can actually model your fees and work out how much of you will be eaten.