Those are 2 different questions I think: - hedge funds - on average they underperform indeed. But ... people always think they can pick one that will outperform

Those are 2 different questions I think: - hedge funds - on average they underperform indeed. But ... people always think they can pick one that will outperform the others. Go figure ! On the other hand, there are some - like Buffett that you cited, that did outperform indexes over very long periods of time. Also, there are actually hedge funds consistently making money - they are mostly algorithmic stuff, not really stock picking. - traders - if you ask about day traders, then we absolutely don't need them. What's happening now with those 0 day expiry options and other shit, is historically unprecedented. It will end very badly. The banks and some hedge funds do need the traders though - the real ones. In the end, you need humans to execute the trades, or at least program / configure the bots.