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> I've always figured that the "past performance, future performance" phrase principally was just legalese, not investment advice. I'd like to see a study on th

by icky 19y ago

> I've always figured that the "past performance, future performance" phrase principally was just legalese, not investment advice. I'd like to see a study on this. You do realize that any such study would necessarily be based entirely on past performance, and would not necessarily predict future performance. ;-) See also: http://en.wikipedia.org/wiki/David_Hume#Problem_of_induction http://en.wikipedia.org/wiki/David_Hume#Problem_of_induction

marvin 19y ago
It doesn't have to be entirely based on past performance - you could do some statistical analysis on the number of funds, which funds are associated with individual investors, fund returns and find whether the distribution of returns overlaps with the distribution that says "the best funds were just lucky". What I am interested in knowing is whether the best investors are able to beat the market over time. And there is a lot of anecdotal evidence that suggests this, for example (a rather extreme one, though) the best hedge funds which have generated an annualized 30% return over more than 15 years. With especially high returns when the rest of the world is tanking. Although this is an edge case, this kind of track record doesn't exactly scream "lucky".
- icky 19y ago
  > It doesn't have to be entirely based on past performance - you could do some statistical analysis on the number of funds, which funds are associated with individual investors, fund returns and find whether the distribution of returns overlaps with the distribution that says "the best funds were just lucky". Right, and as fast as you can generate that data, it immediately falls into the category of "past performance". It's not a market problem, it's a philosophy-of-empiricism problem. ;-) > What I am interested in knowing is whether the best investors are able to beat the market over time. And there is a lot of anecdotal evidence that suggests this, for example (a rather extreme one, though) the best hedge funds which have generated an annualized 30% return over more than 15 years. With especially high returns when the rest of the world is tanking. Although this is an edge case, this kind of track record doesn't exactly scream "lucky". Now, that part is a market problem, and for that, "past performance" really does come into play: are today's best investors universally superior market animals, or are they just uniquely adapted to the current climate?

by icky 19y ago

marvin 19y ago

It doesn't have to be entirely based on past performance - you could do some statistical analysis on the number of funds, which funds are associated with individual investors, fund returns and find whether the distribution of returns overlaps with the distribution that says "the best funds were just lucky". What I am interested in knowing is whether the best investors are able to beat the market over time. And there is a lot of anecdotal evidence that suggests this, for example (a rather extreme one, though) the best hedge funds which have generated an annualized 30% return over more than 15 years. With especially high returns when the rest of the world is tanking. Although this is an edge case, this kind of track record doesn't exactly scream "lucky".

icky 19y ago
> It doesn't have to be entirely based on past performance - you could do some statistical analysis on the number of funds, which funds are associated with individual investors, fund returns and find whether the distribution of returns overlaps with the distribution that says "the best funds were just lucky". Right, and as fast as you can generate that data, it immediately falls into the category of "past performance". It's not a market problem, it's a philosophy-of-empiricism problem. ;-) > What I am interested in knowing is whether the best investors are able to beat the market over time. And there is a lot of anecdotal evidence that suggests this, for example (a rather extreme one, though) the best hedge funds which have generated an annualized 30% return over more than 15 years. With especially high returns when the rest of the world is tanking. Although this is an edge case, this kind of track record doesn't exactly scream "lucky". Now, that part is a market problem, and for that, "past performance" really does come into play: are today's best investors universally superior market animals, or are they just uniquely adapted to the current climate?