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There are so many complex things at play here, but... 1) there are people who work for major institutional investors (think pension funds) who are paid very w

There are so many complex things at play here, but... 1) there are people who work for major institutional investors (think pension funds) who are paid very well to pick managers. If they just pick beta funds, it is hard for them to justify their salaries. 2) not all market participants are interested in 'beating markets'. Many are interested in matching the liabilities to their assets or accomplishing another goal. 3) I believe that there are some managers that are much better than other managers for at least short times. I do not believr i know how to pick them, but the idea that it may be possible may make this bet worth it. 4) If there are good managers, the investment world is winner take all and they will accumulate a lot of assets.

jfim 10y ago
> 3) I believe that there are some managers that are much better than other managers for at least short times. There are always managers who outperform the market, if you look backwards. The problem is whether they're able to repeat their performance moving forwards or if it was due to pure luck.
- wtvanhest 10y ago
  Right. So the question is, can it be predicted. Im not confident I can, but there may be people that know more than I.
  - SirLJ 10y ago
    I think you should look into the trend following concept, I do believe trends can be predicted and with proper risk management money can be made...
    - wtvanhest 10y ago
      There are people who believe that "technical analysis" works. I believe in semi efficient markets and do not believe technical analysis works, especially at scale. I think that quantitative analysis can work in rare casis and generate alpha, but i do not believe that i can predict those cases or generate that alpha myself.
      - SirLJ 10y ago
        Technical analysis is a bit of a voodoo for me as well, but quantitative analysis works indeed, you just need to spend the time and work on it (as with any other skill in life)
        wtvanhest 10y ago
        It does until it doesnt. There are very few quant funds that have figured out how to navigate a rapidly changing economic environment. The problem with quant is that it is backward looking. When the market changes most quantitative funds do not have a good method of accounting for the change. They do not properly account for conditioning information and they end up completely hammered. I am confident that there are people who have at least partially figured out how to invest this way, but i believe it is very, very few. Like less than 10 funds/people on earth.
user5994461 10y ago
> 4) If there are good managers, the investment world is winner take all and they will accumulate a lot of assets. Unlikely. Any winning strategy is limited by the funds you have and the liquidity available in the markets.
- wtvanhest 10y ago
  Funds flow to winning strategies in the investment world so a repeatable strategy will grow their assets very very quickly. Liquidity of markets is the limiting factor.
  - user5994461 10y ago
    In the context of multi-billion dollars edge funds and investment banks, they always have money to play with. For everyone else, it's a high barrier to entry. An edge is of limited value if you don't have the xx M$ to risk on it.

jfim 10y ago

> 3) I believe that there are some managers that are much better than other managers for at least short times. There are always managers who outperform the market, if you look backwards. The problem is whether they're able to repeat their performance moving forwards or if it was due to pure luck.

wtvanhest 10y ago
Right. So the question is, can it be predicted. Im not confident I can, but there may be people that know more than I.
- SirLJ 10y ago
  I think you should look into the trend following concept, I do believe trends can be predicted and with proper risk management money can be made...
  - wtvanhest 10y ago
    There are people who believe that "technical analysis" works. I believe in semi efficient markets and do not believe technical analysis works, especially at scale. I think that quantitative analysis can work in rare casis and generate alpha, but i do not believe that i can predict those cases or generate that alpha myself.
    - SirLJ 10y ago
      Technical analysis is a bit of a voodoo for me as well, but quantitative analysis works indeed, you just need to spend the time and work on it (as with any other skill in life)
      - wtvanhest 10y ago
        It does until it doesnt. There are very few quant funds that have figured out how to navigate a rapidly changing economic environment. The problem with quant is that it is backward looking. When the market changes most quantitative funds do not have a good method of accounting for the change. They do not properly account for conditioning information and they end up completely hammered. I am confident that there are people who have at least partially figured out how to invest this way, but i believe it is very, very few. Like less than 10 funds/people on earth.

user5994461 10y ago

> 4) If there are good managers, the investment world is winner take all and they will accumulate a lot of assets. Unlikely. Any winning strategy is limited by the funds you have and the liquidity available in the markets.

wtvanhest 10y ago
Funds flow to winning strategies in the investment world so a repeatable strategy will grow their assets very very quickly. Liquidity of markets is the limiting factor.
- user5994461 10y ago
  In the context of multi-billion dollars edge funds and investment banks, they always have money to play with. For everyone else, it's a high barrier to entry. An edge is of limited value if you don't have the xx M$ to risk on it.