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Agree, ~7% seems ok? The funny thing about the profession of active fund management is that there is a ‘scoreboard’. Almost no other profession can or would sco
by Gatsky 3y ago
Agree, ~7% seems ok? The funny thing about the profession of active fund management is that there is a ‘scoreboard’. Almost no other profession can or would score itself like this. If they did, I doubt more than 7% would beat a suitable benchmark for hairdressers, plumbers, doctors etc.
This ‘score’ has other useful properties. A successful fund manager has to operate under difficult and changeable conditions for long periods of time. They can’t get there just by default or by being lucky. Knowing which people can do this very challenging task means the advice they give about investing, managing your own psychology and life in general is imbued with a legitimacy that is difficult to find elsewhere.
- cool_dude85 3y ago>They can’t get there just by default or by being lucky. Why do you say that? If I ran a League of Coinflip Guessers with 10,000 entrants, someone would still win the league, and probably with an astonishing score too. Why not the same with stock returns? You have 10k managers it stands to reason some of them will by pure chance beat whatever metric you set.
- Gatsky 3y agoI guess the analogy would be if every year the same people keep finishing in the top quartile in your coin league, at the same time as failing to make the expected losses dictated by chance.