14 ms·

Can you explain how?

• boringg 5y ago
  You simply have more investible dollars to use. Therefore any losses can be spread across a larger base, or, alternatively, you have potentially more gains available to you as a result of more exposure. It's similar to leverage.
  • IG_Semmelweiss 5y ago
    more investments over a greater pool of assets, chasing returns, also increase your surface area of error. Examples abound. There's a reason its easy for funds to get big with a small LP commitment round, and there's also a reason most funds close after hitting certain numbers, increasing the AUM means increased complexity, and thus, potential implosion. The real world bears many examples of growing AUM portfolio that blew up past a certain size. There's no counterexample that I know of , of a fund with a consistent growth pattern that started small, hit size, and then increasing further their size with the same trajectory from having more investment dollars to use.
    • boringg 5y ago
      Agreed - though the numbers in the Thiel Roth aren't at that level of scale. Therefore having more money to invest in the market allows for an advantage. From your statement I can't tell if you think that having more after tax money is a benefit or a drawback for Thiel's investments. Also at higher AUM VC you have the Softbanks (and now every major VC firm that needs to compete at that level or be left in the dust)
• xkjkls 5y ago
  Taxes drive a lot of investment strategies. A large number of strategies to increase returns are things like tax loss harvesting, because every sale forces a taxable event that is going to reduce your total capital base. Not being taxed obviates all of that and opens up a number of opportunities.