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What am asking is there conceptually a talent/skill that would allow me to do that, and should I have any reason to think I've got it? Excellent question. The
by scrumper 11y ago
What am asking is there conceptually a talent/skill that would allow me to do that, and should I have any reason to think I've got it?
Excellent question. The answer, well my answer, is that it's a different skill set. I think the value the manager brings is their skill and diligence in handling the implementation details (which commodities to buy, securities to short, options to write; how to manage risk) of a strategy, which could be as simple as some directional conviction (I like renewables, say) or a philosophy (opportunistic investing in special situations in mid caps).
Your skill is that of an educated consumer: deciding what product you want (your conviction), and selecting a provider based on whatever subjective and objective metrics you deem important. Not all that dissimilar from choosing any expert vendor in an area you don't understand in depth - doctors, contractors, lawyers, even financial advisors (to whom you could outsource the selection part entirely, of course)
Note that nowhere here am I denying the existence of luck in getting into those funds which were able to do well in the crisis.
- bradleyjg 11y agoRe: hiring expert vendors In my experience most people are terrible at that. Even if you go online and look at what other people have to say, those people have no idea about how well the professional did, given that they didn't know expected distribution of outcomes should have been to begin with. Clients often end up being unreasonably thrilled with a mildly positive result in an easy case and unreasonably pissed off with a mildly positive result in a really tough case. The whole thing ends up devolving into a personality, and sometimes literal, beauty contest.
- scrumper 11y agoThat's true, though I'd have to hope those people in the market for alternative investments would, if only by virtue of more frequent exposure to professional advisors, have a more sophisticated approach.
- rahimnathwani 11y agoPerhaps that's where funds of funds come in. FoF managers can spend all day evaluating various hedge funds' performance/execution/whatever. But how do you pick a FoF manager?
- rahimnathwani 11y agoTrue. I'm actually amazed that many business owners are able to select and get good outcomes from expert vendors, when they have a very limited understanding of how those vendors achieve their results. Perhaps this is the reason for the prevalent advice that consultants should sell the benefits/outcomes, get referrals, rather than focus on the technical tasks they will undertake to achieve the outcomes. The business owner to whom they are selling has no means to evaluate claims of their technical chops. But, if they see the consultant has succeeded in something similar for 10 previous clients, then that may be enough for them to make a decision to start.