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I think you're taking an overly pessimistic view on a number of things. Both volatility and bid-ask spreads are down considerably since the growth of high-frequ

I think you're taking an overly pessimistic view on a number of things. Both volatility and bid-ask spreads are down considerably since the growth of high-frequency trading. Buybacks in general are bad for everyone involved because they're often done when valuations are high, however, they can be beneficial to shareholders when valuations are low. Shorting helps facilitate price discovery and options are used to protect against large downside risks. > Hedge funds, as a class, underperform the market, partly because of their excessive fees. You're thinking of mutual funds. Hedge funds as a class do outperform the market, even after fees.

wnissen 12y ago
> You're thinking of mutual funds. Hedge funds as a class do outperform the market, even after fees. False. Lousy studies of hedge funds show they outperform, but the second you take into account survivor bias, the opposite is true. There have been huge numbers of terrible hedge funds created and liquidated that swamp the few successful ones that everybody hears about.
pinky1417 12y ago
Hedge funds do indeed underperform the market: http://www.zerohedge.com/news/2013-12-13/hedge-funds-underperform-sp-5th-year-row http://www.zerohedge.com/news/2013-12-13/hedge-funds-underpe... Same with mutual funds. With both mutual funds and hedge funds, investors are paying a ton of money for nonexistent skill.
- jeffreyrogers 12y ago
  You chose a five year period of underperformance when the markets are doing extraordinarily well. On the whole HF returns are higher than the market by about 6%. And in particular during the financial crisis hedge funds did better than the market as a whole.
AnthonyMouse 12y ago
> Buybacks in general are bad for everyone involved because they're often done when valuations are high, however, they can be beneficial to shareholders when valuations are low. The company paying you a dividend is mathematically equivalent to everyone tendering the company that percentage of their shares for cash and then having a stock split so that everyone ends up with the same number of shares they had originally. The only practical difference is the tax treatment.
- spacehome 12y ago
  The tax treatment is significant, though, and a lot of investors prefer buybacks to dividends because of it.

wnissen 12y ago

> You're thinking of mutual funds. Hedge funds as a class do outperform the market, even after fees. False. Lousy studies of hedge funds show they outperform, but the second you take into account survivor bias, the opposite is true. There have been huge numbers of terrible hedge funds created and liquidated that swamp the few successful ones that everybody hears about.

pinky1417 12y ago

Hedge funds do indeed underperform the market: http://www.zerohedge.com/news/2013-12-13/hedge-funds-underperform-sp-5th-year-row http://www.zerohedge.com/news/2013-12-13/hedge-funds-underpe... Same with mutual funds. With both mutual funds and hedge funds, investors are paying a ton of money for nonexistent skill.

jeffreyrogers 12y ago
You chose a five year period of underperformance when the markets are doing extraordinarily well. On the whole HF returns are higher than the market by about 6%. And in particular during the financial crisis hedge funds did better than the market as a whole.

AnthonyMouse 12y ago

> Buybacks in general are bad for everyone involved because they're often done when valuations are high, however, they can be beneficial to shareholders when valuations are low. The company paying you a dividend is mathematically equivalent to everyone tendering the company that percentage of their shares for cash and then having a stock split so that everyone ends up with the same number of shares they had originally. The only practical difference is the tax treatment.

spacehome 12y ago
The tax treatment is significant, though, and a lot of investors prefer buybacks to dividends because of it.