This is the presentation I gave at the IPI yesterday:

Category: Hedge Funds, Psychology

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

10 Responses to “Romancing Alpha, Forsaking Beta”

  1. umbro says:

    Hi Barry,

    Great Presentation. Can you please source the Vanguard study that references that only 1% of active managers outperform (I think you mentioned that you would post the link but I never saw the exact data that backs up those number). I think your point is spot on in general but I would guess that the data points (only 1% of managers outperform net of fees, and you only have a 1-in-100 shot of outperforming) may apply to a certain asset class over a certain period. I would take issue with the way it is presented (unqualified) as a general rule.

    Thanks for anything you can dig up!

  2. chomen says:

    The cheerfully cute drawings are at odds with the darkness of the message.

  3. awealthofcommonsense says:

    This is a great presentation. I have seen the performance divergence before but the data on the amount that investors make vs. how much the managers bring home in fees is pretty eye opening. How long do you think it will take institutional investors to reverse course on this? All of the pensions and endowments that loaded up on hedge funds have to be feeling the pain of underperfromance at this point.

  4. John Adamson says:

    I learned the same lessons years ago when I worked in Las Vegas taking race and sports bets.

    Before working there, I thought some of my behaviors were uniquely idiotic. After working there, and observing people, I realized I was just human. We’re all subject to the same human impulses.

    You should add “over-trading” to the list. It’s a result of our human desire to avoid boredom with some excitement. When people bet, subconsciously they don’t care if they win or lose – they just want to bet.
    People also just want to “play the market.” They like the challenge and the excitement it brings to their lives.

  5. end game says:

    I agree with other posts. A great and important presentation.

    Can someone explain to me why financial advisors aren’t moving clients into Fundamental Indexation?

    Barry — would you please let me know whether you will be back in LA for presentation? I am a presentation arranger for the industry.

  6. winstongator says:

    I think people should have read the Big Short before investing in Paulson. That was (hopefully) a once in a lifetime event. At least to the degree housing fell – there have been local housing busts in many places, CA, TX, FL, but you’d need to be buying and selling homes to really rake it in during those busts. So he had one big win, in a specialized case, he had unique involvement in. Why did people rush to the guy?

  7. Tom Coleman says:

    On the other hand, Leigh Drogan makes some contrary arguments here: