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The real problem is a systematic inability to tell good managers from bad managers - the people who are leveraging up bull runs, or betting on 30 numbers on the
by Eliezer 18y ago
The real problem is a systematic inability to tell good managers from bad managers - the people who are leveraging up bull runs, or betting on 30 numbers on the roulette wheel, versus those actually generating excess returns. So really, most of the smart people in finance, especially quants, are just there to signal intelligence rather than having testable skills. This is the waste. Otherwise we would need much fewer money managers.
- gaius 18y agomost of the smart people in finance, especially quants, are just there to signal intelligence This is exactly it. Hedge funds want to tell their wealthy but not terribly smart clients (e.g. heirs, etc) "we have PhDs managing your money". That it is quite literally not rocket science, they never know. The danger came because the fund managers started to believe they were 10x rather than 10% smarter than average.