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> Which is obvious: if they couldn't charge their customers more than they earn, they wouldn't offer their services in the first place -- they would just invest
by xboxnolifes 4y ago
> Which is obvious: if they couldn't charge their customers more than they earn, they wouldn't offer their services in the first place -- they would just invest on their own.
This isn't obviously true. Taking 1% yearly of $100,000,000 (compounding) from investors is better than earning 15% yearly on investing your own $1,000,000 (compounding). (Or some similar charging strategy).
- kqr 4y agoThat is true, and indeed what happens with some passive index funds, for example. However, from my experience, when looking for profits, people tend to prefer to arb inefficient markets before they choose to work on larger scales. So if one can choose between charging more than one provides, or charging "fairly" but at giant scales, the first step of the evolution will be the arbitrage.
- dmurray 4y agoAnd you probably shouldn't trust a hedge fund manager who doesn't have his own $1,000,000 tied up on the same fund, anyway.