Poll - The Stock Market and Vintage Sales

Peter_Spaeth · #1 03-19-2025, 10:13 AM

Quote:

Originally Posted by Balticfox

I'm skeptical. Hedge funds call themselves that because the correlation coefficient of their returns against those of the stock market are low. That though doesn't mean they can't be very risky indeed. That's what history shows anyway.

So why do they attract such huge amounts of capital, if people would be better off with index funds, or a mix of index funds and bond funds? Countless billions are invested in these funds.

Balticfox · #2 03-19-2025, 11:17 AM

Quote:

Originally Posted by Peter_Spaeth

So why do they attract such huge amounts of capital, if people would be better off with index funds, or a mix of index funds and bond funds?

I wasn't the one who made that argument. I would sooner trust a portfolio manager with a long above average track record to beat the market than an index selected not to beat the average but to be the average. Yes, the statistical evidence for my preference is lacking but I'd rather choose an experienced, intelligent investor to manage my portfolio than the chimpanzee who beat the market the most by throwing darts.

Quote:

Originally Posted by Peter_Spaeth

Countless billions are invested in these funds.

Because every investor an edge, and every single hedge fund manager can make a very good case why his strategy will deliver the superior risk adjusted returns. Only some (a very few?) succeed though.

Peter_Spaeth · #3 03-19-2025, 11:40 AM

Quote:

Originally Posted by Balticfox

I wasn't the one who made that argument. I would sooner trust a portfolio manager with a long above average track record to beat the market than an index selected not to beat the average but to be the average. Yes, the statistical evidence for my preference is lacking but I'd rather choose an experienced, intelligent investor to manage my portfolio than the chimpanzee who beat the market the most by throwing darts.

Because every investor an edge, and every single hedge fund manager can make a very good case why his strategy will deliver the superior risk adjusted returns. Only some (a very few?) succeed though.

Are you familiar with Eugene Fama's research or John Bogle's book?

Balticfox · #4 03-19-2025, 03:49 PM

Quote:

Originally Posted by Peter_Spaeth

Are you familiar with Eugene Fama's research or John Bogle's book?

Sadly no. I'll look them up.

Gorditadogg · #5 03-19-2025, 06:14 PM

Quote:

Originally Posted by Peter_Spaeth

Are you familiar with Eugene Fama's research or John Bogle's book?

Peter, are you going for your MBA in Finance? Those are a couple big names to know if you are.

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Peter_Spaeth · #6 03-19-2025, 07:13 PM

Quote:

Originally Posted by Gorditadogg

Peter, are you going for your MBA in Finance? Those are a couple big names to know if you are.

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I read Bogle's book a long time ago, it was very enlightening, gave me a new perspective. Very short and to the point.

bk400 · #7 03-20-2025, 12:46 AM

Quote:

Originally Posted by Peter_Spaeth

I read Bogle's book a long time ago, it was very enlightening, gave me a new perspective. Very short and to the point.

+1. A Random Walk Down Wall Street by Burton Malkiel is also worth a read.

EddieP · #8 03-20-2025, 11:56 AM

If you want to get in the nitty gritty of evaluating and picking stocks then read “Security Analysis” by Benjamin Graham and “Common Stocks and Uncommon Profits” by Philip Fisher. Warren Buffett swears by these two books. Peter Lynch wrote a couple books back in the 1990s which also incorporate Graham’s and Fisher’s stock picking philosophies.Lynch’s books are easy reading.The Intelligent Investor by Graham is also worth reading.

Gorditadogg · #9 03-19-2025, 06:04 PM

Quote:

Originally Posted by Balticfox

I wasn't the one who made that argument. I would sooner trust a portfolio manager with a long above average track record to beat the market than an index selected not to beat the average but to be the average. Yes, the statistical evidence for my preference is lacking but I'd rather choose an experienced, intelligent investor to manage my portfolio than the chimpanzee who beat the market the most by throwing darts.

Because every investor an edge, and every single hedge fund manager can make a very good case why his strategy will deliver the superior risk adjusted returns. Only some (a very few?) succeed though.

The thing about chimpanzees, though, is that you don't have to pay them very much. The results show over and over that the funds with the highest returns are the ones with the lowest fees.

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raulus · #10 03-19-2025, 12:03 PM

Quote:

Originally Posted by Peter_Spaeth

So why do they attract such huge amounts of capital, if people would be better off with index funds, or a mix of index funds and bond funds? Countless billions are invested in these funds.

Everyone thinks they have an edge!

And the hedgies seem to be pretty good at selling their story.

No doubt, some of them are probably pretty good, and might even be worth their elevated fees. I think the general premise is their ability to deliver in any market, although they might miss out on the high highs, they'll also protect you from the downswings.

Often another marketing element is their ability to invest in nontraditional assets that might be off-limits in more traditional funds.

Of course, Buffett's bet didn't make the hedgies look all that great:

https://proinvestnews.com/2025/01/28...for-investors/

joshuanip · #11 03-19-2025, 12:32 PM

.

Peter_Spaeth · #12 03-19-2025, 12:38 PM

S&P Global publishes its SPIVA (S&P Indices Versus Active) scorecards twice a year. The scorecard compares the performance of active mutual funds (after fees) to relevant S&P benchmark indexes over periods of one, three, five, 10, and 15 years. It found that 88% of active large-cap funds failed to beat the S&P 500 over the last 15 years as of the end of 2023. Even when you look at a shorter three-year period, about 80% failed to beat the benchmark.

Peter_Spaeth · #13 03-19-2025, 12:39 PM

https://www.whitecoatinvestor.com/ma...-beat-markets/

joshuanip · #14 03-19-2025, 12:46 PM

.

Peter_Spaeth · #15 03-19-2025, 12:56 PM

Quote:

Originally Posted by joshuanip

It’s hard for mutual funds and 40 act funds to beat the benchmark indices in general because of their structural constraints.

Unconstrained funds have resources, access, and mandate to perform better.

OK I am finding the same data for hedge funds. Assume you will say it's not a valid comparison?

https://www.aei.org/carpe-diem/the-s...nt-even-close/

1952boyntoncollector · #16 03-19-2025, 05:56 PM

Quote:

Originally Posted by Peter_Spaeth

So why do they attract such huge amounts of capital, if people would be better off with index funds, or a mix of index funds and bond funds? Countless billions are invested in these funds.

i have talked to many of fund manager and when i ask them that SPY outperforms 95 percent of funds, they always agree, but they say individuals get too scared to hold them during those extreme downs and rather just let someone else manage

Go and call some of the fund guys..and ask them if they out perform the S and P since the inception of their fund....you will see they dont 95 percent of time time

View Poll Results: Do the stock market losses play into your vintage buys?
Yes	95	25.33%
No	230	61.33%
Sometimes	50	13.33%
Voters: 375. You may not vote on this poll

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