3 ms·

There is room in finance for multiple strategies, and a lot of niche funds that you've never heard of. As an extreme example, Taleb's black swan hypothesis req

by btilly 6y ago

There is room in finance for multiple strategies, and a lot of niche funds that you've never heard of. As an extreme example, Taleb's black swan hypothesis requires investors who are OK with losing money day in and day out. And yet people are willing to invest in Universa Investments. (Which is making a killing this year.) Given https://en.wikipedia.org/wiki/The_Superinvestors_of_Graham-and-Doddsville https://en.wikipedia.org/wiki/The_Superinvestors_of_Graham-a... it there should be an appetite for niche funds following the value investing approach. And indeed https://www.investopedia.com/articles/investing/071415/five-wildly-successful-value-investors.asp https://www.investopedia.com/articles/investing/071415/five-... shows that there are successful funds that follow such approaches. They aren't very popular. But the excuse that professional fund managers CANNOT do something like this is clearly specious. However as Taleb says, courage is the one virtue that can't be faked. Running a fund that follows a different strategy than the mainstream requires having the courage to tell investors that if they are not on board with your fund's strategy, then you would prefer that they take their money elsewhere. That kind of courage is rare. (And can be indistinguishable from stupidity for unbounded times.)

manquer 6y ago
Niche funds are exactly that niche. Most(in numbers not the money they control) are not accredited investors and cannot afford to lose their whole investments. There is not much room for multiple strategies in mainstream investments for good reason . Correspondingly most fund managers are not fancy hedge fund managers who can simply be courageous, the legal and the corporate framework they operate under would not allow for that kind of risk taking. Popular media and writers like Taleb focuses way more on this niche segment because it sells more books/movies etc, or is more interesting to write about, and perhaps also because the industry does control a large amount of wealth. Buffet himself strongly believes that hedge funds simply do not justify the management fees they charge and famously bet a million dollars on that thesis and won. Even of the fund managers who actually do have the chance to take aggressive decisions do not always do better than say index traded funds over a long enough time period.

by btilly 6y ago

manquer 6y ago

Niche funds are exactly that niche. Most(in numbers not the money they control) are not accredited investors and cannot afford to lose their whole investments. There is not much room for multiple strategies in mainstream investments for good reason . Correspondingly most fund managers are not fancy hedge fund managers who can simply be courageous, the legal and the corporate framework they operate under would not allow for that kind of risk taking. Popular media and writers like Taleb focuses way more on this niche segment because it sells more books/movies etc, or is more interesting to write about, and perhaps also because the industry does control a large amount of wealth. Buffet himself strongly believes that hedge funds simply do not justify the management fees they charge and famously bet a million dollars on that thesis and won. Even of the fund managers who actually do have the chance to take aggressive decisions do not always do better than say index traded funds over a long enough time period.