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I know people who work there. That comp data excludes bonuses -- and most importantly -- that employees are able to invest in the proprietary funds themselves,
by davidu 6y ago
I know people who work there. That comp data excludes bonuses -- and most importantly -- that employees are able to invest in the proprietary funds themselves, which generate insane returns.
- jeffbee 6y agoAnother thing the HN orthodoxy rejects is that professional investing and trading can make money above monkey-dart levels, despite the abundance of evidence that it does.
- runamok 6y agoIt's not just HN. It's generally accepted that over 20 year spans almost no actively managed fund beats index funds. Example PDF showing this: https://us.spindices.com/documents/spiva/spiva-us-year-end-2016.pdf https://us.spindices.com/documents/spiva/spiva-us-year-end-2...
- closeparen 6y agoThis assertion is about funds that are open to the general public. No one doubts e.g. Renaissance’s Medallion fund.
- jeffbee 6y agoOK but it's still just false. Go read this obituary of Richard Gilder who recently passed away. He founded a firm that gave ordinary retail investors consistently high returns for decades. https://www.gilderlehrman.org/about/richard-gilder https://www.gilderlehrman.org/about/richard-gilder
- graeme 6y agoThe super investors of graham doddsville is also instructive reading on this point.
- Aunche 6y agoI'm sure that some hedge funds know what they're doing, but it's impossible to tell which are the good ones. Investing in a hedge fund still is functionally equivalent to asking a monkey to throw darts at stocks.
- DuskStar 6y agoAlso, in general if there's a consistent and significantly market-beating (after fees) hedge fund that's available to the public, it's a scam. Most real strategies can't scale infinitely (see Medallion), and so have a maximum amount of useful capital. If the owners can't fill this amount of capital on private markets after a few years, then it probably failed a few sniff tests.
- encoderer 6y agoTotally right. Huge blind spot here.
- losvedir 6y agoWhat evidence? I thought that was standard orthodoxy, not just on HN. No one doubts that people can and have beat basic index funds; I just thought that was a poor predictor of what would beat the market again going forward (perhaps after accounting for fees?). I used to work in sell side equity research before leaving to do software development, because at least from my vantage point, no one was that great at predicting the market.
- nuclearnice1 6y agoI would agree that many professionals beat the index. Some beat it year after year. The trick seems to be guessing who will maintain the outperformance. There seem to be many who have a great run and then underperform.