Highest Rated Comments

quantgeek9956 karma

I loved it and watched it a few times as a graduate. It gives a very clear understanding of what happened, of course in layman terms. Needless to say I preferred the book, which went much more in depth.

quantgeek9953 karma

You shouldn't, indeed.

The problem with this is twofold:
1) The average investor doesn't really know much about investments and finance;
2) The communication from hedge funds and investment managers is not clear, to say the least.
Recent laws are trying to improve point 2, but we, as investors, must learn more to overcome the gap number 1. Once we have the tools, we don't only make our best interest, but also improve the industry as a whole, because these funds won't get the money and they will eventually disappear.
And once they disappear, winners will be much easier to spot. But the market is inefficient in all its respects, and it will stay like that for a while, so please focus on learning and understanding the investment opportunities proposed to you. And if you find a good one after this process, it means you really understand it.

We could add a 3): investors are very greedy, and the Sharpe Ratio and drawdown of passive investments is dissatisfying. So, if one finds a (truly) good opportunity, they give it a try. However, greed leads you to make mistakes. Be always careful.

quantgeek9933 karma

The true magic would be to forecast Buffett's stock picking :) by the time he discloses his holdings, it's already late (but still better than picking ourselves)

quantgeek9923 karma

I don't think there's one, but what I really enjoyed back in the days was the movie Money Monster, with the Quant stating that "the algo" was not the problem, but people using it... Although now I see how managing money is difficult in every respect, especially when discretionarily.

quantgeek9921 karma

Yes, although the institutional investors can be segmented into many different groups. It is true that HFs underperform almost always, however, retail investors did not usually have the "power" to invest properly. Nowadays this is shifting, and memestocks are a clear example. What Buffett does remains unique, but other institutions are not necessarily that successful, and retail traders are learning more (just look at education, how many MFE and Quant Finance MSs are there...) and have more tools (Interactive Brokers, Robinhood and the likes).
And also, the industry is quite stagnating in terms of good new ideas. Recent trends like ESG and thematic investments (ARKK) still have a long way before they can prove to be worthy, especially if you compare with passive investments and especially ETFs, now available to retail clients and often more rewarding than sophisticated active investments.