7 ms·

> 20-30-40% per annum, for over 20 years It is impossible, at least continuously. Nobody has ever managed to do that. You'd be lucky if you could beat the mark

> 20-30-40% per annum, for over 20 years It is impossible, at least continuously. Nobody has ever managed to do that. You'd be lucky if you could beat the market by a few points on average over a 20 years time period. Compensation well for good performance does not make sense when you aren't penalized for losses.

kristofferR 10y ago
Yeah, the oil fund averages just 0.25% above index, and that's without the extra cost of being actively managed factored in (although its huge size probably makes it impossible for it to be passively managed).
- 010a 10y ago
  Are you aware how much 0.25% of $800 billion dollars is? Now, go ahead and complain about a $60M compensation.
  - robryan 10y ago
    So at this stage factoring in the active management cost they are outperforming the market. Of course we don't know in the long run whether that will continue to be the case.
- ascorbic 10y ago
  It's hard to beat the market when you're bigger than many markets.
avn2109 10y ago
>> "...impossible..." https://en.wikipedia.org/wiki/Renaissance_Technologies https://en.wikipedia.org/wiki/Renaissance_Technologies "...famed for one of the best records in investing history, returning more than 35 percent annualized over a 20-year span..."
- melling 10y ago
  And they used algorithms: https://www.youtube.com/watch?v=QNznD9hMEh0 https://www.youtube.com/watch?v=QNznD9hMEh0
- tormeh 10y ago
  People have done it before. It has always turned out to be luck. Fantastic track record until they cease being lucky. So, cynicism and economic orthodoxy aside, that sounds like a really cool company. Has anyone tried just tossing a big dumb neural network on stock data and investigated whether it can make money? It sounds very obvious, but a quick googling returns little. But I guess the investment industry is pretty secretive by nature.
  - auntienomen 10y ago
    RenTec makes too many bets for their track record to be just luck.
  - hiddencost 10y ago
    > Has anyone tried just tossing a big dumb neural network on stock data and investigated whether it can make money? ... yes.
    - boulos 10y ago
      One of our Solutions Architects wrote this up for amusement: https://cloudplatform.googleblog.com/2016/03/TensorFlow-machine-learning-with-financial-data-on-Google-Cloud-Platform.html https://cloudplatform.googleblog.com/2016/03/TensorFlow-mach...
  - groby_b 10y ago
    https://xkcd.com/1570/ https://xkcd.com/1570/
  - hueving 10y ago
    Are you seriously asking if hedge funds that pay hundreds of thousands of dollars salary to top experts from all kinds of fields have investigated using machine learning?
adventured 10y ago
Continuously? Ok, perhaps that would be almost impossible, to pull off 20% for 20 years without missing a year. However, Buffett and Soros managed to average above 20% annual returns over 30 plus years. For example in the 1960s Berkshire returned 28.3% per year averaged. In the 1970s it returned 22.2% per year averaged. In the 1980s it averaged 39.1% (!) per year. In the 1990s it averaged 20.5% per year. Nobody would hold their breath on another investor matching Buffett or Soros. It is in fact possible though. The big problem for the Norway fund is obviously the scale. Berkshire at $360b in market cap, will struggle perpetually going forward with keeping up with the S&P 500 over time (as is frequently noted by Buffett).
- webbore 10y ago
  The thing about both Buffett and Soros is that they get deals that the general investor, or even really good and kinda famous investor, would never get. For example, Buffet did 300 million in unsecured loans (but with front-of-line payback) with Harley Davidson in 2009 at 15 percent, essentially to cover customer financing (i.e. cashflow) not because the company was in any real trouble. You and I would be lucky to find that sort of return from the riskiest loan, let alone a profitable manufacturing company. AND, Buffet could have made more than a Billion extra if he'd bought stock instead of debt, so even when he's wrong he's still getting a sweetheart deal.
  - morgante 10y ago
    It's important to note that this discussion is about a massive sovereign wealth fund, not the average investor. I absolutely agree that the average person should stick to passive index funds. But if you have nearly a trillion dollars to invest, you'd be a fool to stick to passive strategies.
xiaoma 10y ago
That's just not true. Joel Greenblatt's fund beat an annualized return of 40% from 1985 to 2006. Carl Icahn got over a 30% per year annualized return from 1968 to 2011. That's almost 50 years!
- alasdair_ 10y ago
  Right, and a lottery winner who wins a $500MM jackpot on a $1 ticket has annualized return of even more than that, when annualized over the same timescale. None of that matters if you can't pick the winning players in advance. With enough variance and enough players, someone will eventually have double-digit annualized returns over decades, it doesn't mean that they are necessarily superb investors.
  - auntienomen 10y ago
    What would you think if you saw someone win the lottery 2 months out of every 3 for 20 years?
  - greenleafjacob 10y ago
    How would your position be falsified? You could always say that later someone will revert to the mean.
    - Retric 10y ago
      Simple, compare a large number of investors based on some criteria with the overall average. AKA, if you think there are people that do better than average, then picking people who have beaten the odds for 10 years and see how they do over the next 10 years. Repeat over a few decades. There are things that seem to work. The most common way to 'beat the market' is trading a low chance and ideally hidden chance of failure for inflated returns. EX: A 1 percent change of losing 95% of your investment should be worth lot's of money on good years. This is really appealing when investing other peoples money as you don't share in their downside.
  - Gustomaximus 10y ago
    The BIG difference is someone can go invest in Greenblatt or Icahn's fund with a reasonable expectation of these returns ongoing. Not so with a lottery winner.
executive 10y ago
"From 1994 through mid-2014 it averaged a 71.8% annual return." https://en.m.wikipedia.org/wiki/Renaissance_Technologies https://en.m.wikipedia.org/wiki/Renaissance_Technologies

kristofferR 10y ago

Yeah, the oil fund averages just 0.25% above index, and that's without the extra cost of being actively managed factored in (although its huge size probably makes it impossible for it to be passively managed).

010a 10y ago
Are you aware how much 0.25% of $800 billion dollars is? Now, go ahead and complain about a $60M compensation.
- robryan 10y ago
  So at this stage factoring in the active management cost they are outperforming the market. Of course we don't know in the long run whether that will continue to be the case.
ascorbic 10y ago
It's hard to beat the market when you're bigger than many markets.

avn2109 10y ago

>> "...impossible..." https://en.wikipedia.org/wiki/Renaissance_Technologies https://en.wikipedia.org/wiki/Renaissance_Technologies "...famed for one of the best records in investing history, returning more than 35 percent annualized over a 20-year span..."

melling 10y ago
And they used algorithms: https://www.youtube.com/watch?v=QNznD9hMEh0 https://www.youtube.com/watch?v=QNznD9hMEh0
tormeh 10y ago
People have done it before. It has always turned out to be luck. Fantastic track record until they cease being lucky. So, cynicism and economic orthodoxy aside, that sounds like a really cool company. Has anyone tried just tossing a big dumb neural network on stock data and investigated whether it can make money? It sounds very obvious, but a quick googling returns little. But I guess the investment industry is pretty secretive by nature.
- auntienomen 10y ago
  RenTec makes too many bets for their track record to be just luck.
- hiddencost 10y ago
  > Has anyone tried just tossing a big dumb neural network on stock data and investigated whether it can make money? ... yes.
  - boulos 10y ago
    One of our Solutions Architects wrote this up for amusement: https://cloudplatform.googleblog.com/2016/03/TensorFlow-machine-learning-with-financial-data-on-Google-Cloud-Platform.html https://cloudplatform.googleblog.com/2016/03/TensorFlow-mach...
- groby_b 10y ago
  https://xkcd.com/1570/ https://xkcd.com/1570/
- hueving 10y ago
  Are you seriously asking if hedge funds that pay hundreds of thousands of dollars salary to top experts from all kinds of fields have investigated using machine learning?

adventured 10y ago

Continuously? Ok, perhaps that would be almost impossible, to pull off 20% for 20 years without missing a year. However, Buffett and Soros managed to average above 20% annual returns over 30 plus years. For example in the 1960s Berkshire returned 28.3% per year averaged. In the 1970s it returned 22.2% per year averaged. In the 1980s it averaged 39.1% (!) per year. In the 1990s it averaged 20.5% per year. Nobody would hold their breath on another investor matching Buffett or Soros. It is in fact possible though. The big problem for the Norway fund is obviously the scale. Berkshire at $360b in market cap, will struggle perpetually going forward with keeping up with the S&P 500 over time (as is frequently noted by Buffett).

webbore 10y ago
The thing about both Buffett and Soros is that they get deals that the general investor, or even really good and kinda famous investor, would never get. For example, Buffet did 300 million in unsecured loans (but with front-of-line payback) with Harley Davidson in 2009 at 15 percent, essentially to cover customer financing (i.e. cashflow) not because the company was in any real trouble. You and I would be lucky to find that sort of return from the riskiest loan, let alone a profitable manufacturing company. AND, Buffet could have made more than a Billion extra if he'd bought stock instead of debt, so even when he's wrong he's still getting a sweetheart deal.
- morgante 10y ago
  It's important to note that this discussion is about a massive sovereign wealth fund, not the average investor. I absolutely agree that the average person should stick to passive index funds. But if you have nearly a trillion dollars to invest, you'd be a fool to stick to passive strategies.

xiaoma 10y ago

That's just not true. Joel Greenblatt's fund beat an annualized return of 40% from 1985 to 2006. Carl Icahn got over a 30% per year annualized return from 1968 to 2011. That's almost 50 years!

alasdair_ 10y ago
Right, and a lottery winner who wins a $500MM jackpot on a $1 ticket has annualized return of even more than that, when annualized over the same timescale. None of that matters if you can't pick the winning players in advance. With enough variance and enough players, someone will eventually have double-digit annualized returns over decades, it doesn't mean that they are necessarily superb investors.
- auntienomen 10y ago
  What would you think if you saw someone win the lottery 2 months out of every 3 for 20 years?
- greenleafjacob 10y ago
  How would your position be falsified? You could always say that later someone will revert to the mean.
  - Retric 10y ago
    Simple, compare a large number of investors based on some criteria with the overall average. AKA, if you think there are people that do better than average, then picking people who have beaten the odds for 10 years and see how they do over the next 10 years. Repeat over a few decades. There are things that seem to work. The most common way to 'beat the market' is trading a low chance and ideally hidden chance of failure for inflated returns. EX: A 1 percent change of losing 95% of your investment should be worth lot's of money on good years. This is really appealing when investing other peoples money as you don't share in their downside.
- Gustomaximus 10y ago
  The BIG difference is someone can go invest in Greenblatt or Icahn's fund with a reasonable expectation of these returns ongoing. Not so with a lottery winner.

executive 10y ago

"From 1994 through mid-2014 it averaged a 71.8% annual return." https://en.m.wikipedia.org/wiki/Renaissance_Technologies https://en.m.wikipedia.org/wiki/Renaissance_Technologies