Meet my friend, the mediocre hedge fund manager
There is no such thing as smart money. Yet, when was the last time you heard some one described as a "below-average hedge fund manager?" Probably never. Or a "mediocre physicist?" That's because these two professions seem mystical to people who don't stop to question that at least half of the hedge fund managers--and physicists-- graduated in the bottom 50% of their university peer group.
Yet look at the HFRI Equity Hedge Index compared to investing in a no-fee indexed S&P fund since 1996--the last 20 years. (Note: you've been screwed in either case so don't hold your breath). Yes, all those wicked smart hedge fund guys (remember their nice suits from back in the late 90's?) rocked along at 13% annual returns from '96 til early '00. So did the S&P.
Since then it's been a negative shithouse for the guys who get their drawn portraits published in the WSJ. Between ''08 and '13 a dollar invested in a hedge fund has declined to about 94 cents. Not that you could invest a dollar mind you. But still--that's WORSE than the DJIA for those five years. Large cap equities were already busy underperforming in their own unique way during that same period.
We'll let these people steal our capital until we start realizing that "brilliant" and "money manager" are not synonymous. Or that we believe our retirement plans can be expected to return 8% a year until we die (they've annualized out after low fees at around .8% annual growth actually--power of ten error there, you hedge fund guys!).
Or that just because some one uses the phrase "options modeling" they don't hold a better grip on reality than you do.
Or that we repress our own natural abilities at math.
These are NOT smart people.
Yet look at the HFRI Equity Hedge Index compared to investing in a no-fee indexed S&P fund since 1996--the last 20 years. (Note: you've been screwed in either case so don't hold your breath). Yes, all those wicked smart hedge fund guys (remember their nice suits from back in the late 90's?) rocked along at 13% annual returns from '96 til early '00. So did the S&P.
Since then it's been a negative shithouse for the guys who get their drawn portraits published in the WSJ. Between ''08 and '13 a dollar invested in a hedge fund has declined to about 94 cents. Not that you could invest a dollar mind you. But still--that's WORSE than the DJIA for those five years. Large cap equities were already busy underperforming in their own unique way during that same period.
We'll let these people steal our capital until we start realizing that "brilliant" and "money manager" are not synonymous. Or that we believe our retirement plans can be expected to return 8% a year until we die (they've annualized out after low fees at around .8% annual growth actually--power of ten error there, you hedge fund guys!).
Or that just because some one uses the phrase "options modeling" they don't hold a better grip on reality than you do.
Or that we repress our own natural abilities at math.
These are NOT smart people.
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