3 ms·

> by managing government money through the social security system, union pension funds, college endowments, and sovereign wealth funds Why don't you target tha

by bko 2y ago

> by managing government money through the social security system, union pension funds, college endowments, and sovereign wealth funds Why don't you target that anger and contempt to the organizations willfully giving money to these organizations? "Social security system is a parasite on society, who steals taxpayers money and throws it away in inefficient vehicles evidence over decades that tells us that their investments aren't outperfoming index funds"

JumpCrisscross 2y ago
> Why don't you target that anger and contempt to the organizations willfully giving money to these organizations? This happens from time to time. Most recently, in pensions withdrawing from private equity. It’s historically come to bite when these managers hit a bout of volatility. Put simply, portfolio theory is incredibly robust. The question isn’t why hedge funds, but why does it keep paying so well?
- bko 2y ago
  Why can hedge funds negotiate such high fees despite lackluster performance? You answered it in the prior sentence: portfolio theory is incredibly robust. They (claim) to provide diversified return. The idea is that although they may not provide a net return comparable to low cost equity ETFs, they provide diversified return. And portfolio theory tells us lower yielding assets can actually increase your portfolio's risk-adjusted return, as long as it's not perfectly correlated with your existing investments. Whether this plays out in practice is a different story, but that's the idea and selling point.
  - JumpCrisscross 2y ago
    > Why can hedge funds negotiate such high fees despite lackluster performance? As you point out, what counts as performance varies. Magnitude of net returns is important. But by analogy, you could get massive net returns betting on the Powerball.

3 ms·

> by managing government money through the social security system, union pension funds, college endowments, and sovereign wealth funds Why don't you target tha

by bko 2y ago

JumpCrisscross 2y ago
> Why don't you target that anger and contempt to the organizations willfully giving money to these organizations? This happens from time to time. Most recently, in pensions withdrawing from private equity. It’s historically come to bite when these managers hit a bout of volatility. Put simply, portfolio theory is incredibly robust. The question isn’t why hedge funds, but why does it keep paying so well?
- bko 2y ago
  Why can hedge funds negotiate such high fees despite lackluster performance? You answered it in the prior sentence: portfolio theory is incredibly robust. They (claim) to provide diversified return. The idea is that although they may not provide a net return comparable to low cost equity ETFs, they provide diversified return. And portfolio theory tells us lower yielding assets can actually increase your portfolio's risk-adjusted return, as long as it's not perfectly correlated with your existing investments. Whether this plays out in practice is a different story, but that's the idea and selling point.
  - JumpCrisscross 2y ago
    > Why can hedge funds negotiate such high fees despite lackluster performance? As you point out, what counts as performance varies. Magnitude of net returns is important. But by analogy, you could get massive net returns betting on the Powerball.