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> Truthfully, why does anyone buy any particular asset expecting to do better than the market? The portfolio managers do not. They want a basket of assets, id
by jpdoctor 15y ago
> Truthfully, why does anyone buy any particular asset expecting to do better than the market?
The portfolio managers do not. They want a basket of assets, ideally with an expectation value and standard deviation.
Read up on Modern Portfolio Theory, which is a typical entry point on portfolio management, if you are curious why expecting to do better than the market is irrelevant. (Despite the name, MPT is not very modern.)
Edit: Note also, when I said portfolio manager above, I meant the customers of the VCs, not the VCs themselves.
- doyoulikeworms 15y agoI think we're on the same page on this one. I was mostly trying to explain this sort of behavior based on the (semi-)efficient market hypothesis, and its implications. VC's (and their customers) tend to portend some sort of knowledge that a sufficient portion of other market actors are unaware of, or are unable to act on. If you (a VC customer) believe the VC, and perceive his reasoning to be correct, that's all fine and good. Don't expect to win every time, though, which I guess was the point of this thread. That said, thanks for pointing my direction to the MPT!