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I'm intrigued. 1. How is a regular guy going to achieve the same results as a hedge fund with a 10 million dollar portfolio? 2. Regarding Buffett's quote, do
by alecst 5y ago
I'm intrigued.
1. How is a regular guy going to achieve the same results as a hedge fund with a 10 million dollar portfolio?
2. Regarding Buffett's quote, do you mean "diversification is protection against ignorance?" I think his point is that if you have special knowledge you can take a concentrated position in a stock, but that for the regular guy, diversification is a hedge. Since most stocks underperform and most gains are from a small fraction of stocks, his quote seems to make sense.
- DeathArrow 5y ago>How is a regular guy going to achieve the same results as a hedge fund with a 10 million dollar portfolio? Maybe by finding a well managed small fund and buying into it?
- throw0101a 5y ago> Maybe by finding a well managed small fund and buying into it? Just because a fund manager is good now, does not mean they'll be good in the future. It's the same situation as with stocks: how do you know when to jump ship? Further, over longer periods of time, most fund managers don't beat the market average: * https://www.ifa.com/articles/despite_brief_reprieve_2018_spiva_report_reveals_active_funds_fail_dent_indexing_lead_-_works/ https://www.ifa.com/articles/despite_brief_reprieve_2018_spi... And just because a few funds do manage to beat the average, it's hard to tell that they are ahead of time. Over the last 40-50 years (in the US) there have been some that have had excellent results—for a while. Until they didn't ("Chasing Top Fund Managers"): * https://www.youtube.com/watch?v=p6HrepdLSu4 https://www.youtube.com/watch?v=p6HrepdLSu4 (18m34s) * https://rationalreminder.ca/podcast/136 https://rationalreminder.ca/podcast/136 (topic starts at ~15m) Plenty of peer-reviewed papers at the bottom of that second (podcast) link.