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The fact is, retail cannot compete risk-wise with institutions. Thanks to Quantitative Easing and low interest rates, money, by itself, has very little value. T

The fact is, retail cannot compete risk-wise with institutions. Thanks to Quantitative Easing and low interest rates, money, by itself, has very little value. To make lending money "valuable", you have to leverage it at ratio that the average retail investor can't afford risk-wise. Only edge fund that can afford to risk it all can do that. More so, 2008 proven that the government was willing to bail out institutions, something not available to retail.

mamonster 2y ago
>The fact is, retail cannot compete risk-wise with institutions. You can, but you need to be taking risks that institutions can't/aren't allowed to take.
rossdavidh 2y ago
I think the downvotes come from people who don't like to believe this is true. But it is true, at least the part about retail investors being unable to compete. Sure there are occasional ones who win the lottery, but in general large institutions can afford to devote their attention full time to finding out what to invest in, get lower rates for leverage, and probably also use inside info more often than is discovered.
lottin 2y ago
As far as I know, the majority of hedge funds do not outperform the market in the long run, so I'm not sure where you get this conclusion from.
- username332211 2y ago
  Most aren't trying to. The manager in an investment fund probably has all the money he needs to enjoy life. He doesn't care about the performance of his fund, so long as clients stay on board. And the funny thing is, that makes his fund far more driven by the whims of the public than retail investors. So many stories about funds staying away from the dot-com bubble end with "the fund had to close, because of clients pulling out their money". Half the reason Warren Buffett is hailed as genius is because his shareholders can't pull out their money easily.
- heisgone 2y ago
  As someone said, they don't need to outperform. They only need to perform enough to survive and pull management fees, which are risk free for the managers.
  - lottin 2y ago
    Sure but the idea that the "little guy" doesn't stand a chance against the big hedge funds does seem baseless.

mamonster 2y ago

>The fact is, retail cannot compete risk-wise with institutions. You can, but you need to be taking risks that institutions can't/aren't allowed to take.

rossdavidh 2y ago

I think the downvotes come from people who don't like to believe this is true. But it is true, at least the part about retail investors being unable to compete. Sure there are occasional ones who win the lottery, but in general large institutions can afford to devote their attention full time to finding out what to invest in, get lower rates for leverage, and probably also use inside info more often than is discovered.

lottin 2y ago

As far as I know, the majority of hedge funds do not outperform the market in the long run, so I'm not sure where you get this conclusion from.

username332211 2y ago
Most aren't trying to. The manager in an investment fund probably has all the money he needs to enjoy life. He doesn't care about the performance of his fund, so long as clients stay on board. And the funny thing is, that makes his fund far more driven by the whims of the public than retail investors. So many stories about funds staying away from the dot-com bubble end with "the fund had to close, because of clients pulling out their money". Half the reason Warren Buffett is hailed as genius is because his shareholders can't pull out their money easily.
heisgone 2y ago
As someone said, they don't need to outperform. They only need to perform enough to survive and pull management fees, which are risk free for the managers.
- lottin 2y ago
  Sure but the idea that the "little guy" doesn't stand a chance against the big hedge funds does seem baseless.