3 ms·

On the large scale, wealth reliably collects progressively higher percentages of return the higher the base capital.

smabie 6y ago
The absolutely dismal performance of most hedge funds indicates otherwise. In fact, it's probably easier to generate alpha using small amounts of money. When you're managing billions and billions of dollars, you're severely constrained in the types of strategies you can actually run. This is why, for example, that RenTech's Medallion fund is capped at 10bn. Just by investing in an index fund, retail investors are getting a pretty great investment, essentially freeloading off of all the hard work the active funds are doing.
- artsyca 6y ago
  How does that bode for the vision fund? Doomed from the start?
  - smabie 6y ago
    I would say that the vision fund was predicated on a audacious idea that was either pure genius or absolutely idiotic. The idea is as follows, instead of investing our huge pile of money into a bunch of different companies, which takes a lot of legwork, let's just fund a relatively small amount and give them a bunch of money. We will give them so much money that it's not possible for them to do anything except totally crush the competition and control the entire market. The problem with the idea, and the eventual reason it didn't work, was that though it was largest VC fund ever, 100bn isn't actually that much in the scheme of things. There's so much money sloshing around the system looking for the place where it will be treated best. So, in essence, what Softbank ended up doing was bidding up the price of the entire industry, creating massive inflation. If Softbank gives a shi-tton of money , and another VC gives a shit-ton to a competitor, they've both just wasted a shit-ton of money. I actually don't think Masa is the compete idiotic everyone makes him out to be. He has a very high tolerance for risk, but that doesn't make him irrational. The Vision Fund might not be doing that well, but Softbank's stock is looking pretty good at the moment.
    - artsyca 6y ago
      He's the inventor of the danged electronic dictionary man.

The absolutely dismal performance of most hedge funds indicates otherwise. In fact, it's probably easier to generate alpha using small amounts of money. When you're managing billions and billions of dollars, you're severely constrained in the types of strategies you can actually run. This is why, for example, that RenTech's Medallion fund is capped at 10bn. Just by investing in an index fund, retail investors are getting a pretty great investment, essentially freeloading off of all the hard work the active funds are doing.

artsyca 6y ago
How does that bode for the vision fund? Doomed from the start?
- smabie 6y ago
  I would say that the vision fund was predicated on a audacious idea that was either pure genius or absolutely idiotic. The idea is as follows, instead of investing our huge pile of money into a bunch of different companies, which takes a lot of legwork, let's just fund a relatively small amount and give them a bunch of money. We will give them so much money that it's not possible for them to do anything except totally crush the competition and control the entire market. The problem with the idea, and the eventual reason it didn't work, was that though it was largest VC fund ever, 100bn isn't actually that much in the scheme of things. There's so much money sloshing around the system looking for the place where it will be treated best. So, in essence, what Softbank ended up doing was bidding up the price of the entire industry, creating massive inflation. If Softbank gives a shi-tton of money , and another VC gives a shit-ton to a competitor, they've both just wasted a shit-ton of money. I actually don't think Masa is the compete idiotic everyone makes him out to be. He has a very high tolerance for risk, but that doesn't make him irrational. The Vision Fund might not be doing that well, but Softbank's stock is looking pretty good at the moment.
  - artsyca 6y ago
    He's the inventor of the danged electronic dictionary man.