Cardboard Posted April 30, 2016 Share Posted April 30, 2016 It is worth looking at the chart posted by Warren Buffett at the AGM on the performance of the S&P 500 vs Protégé Hedge Funds. The difference in performance is striking and while I agree with Warren that fees hurt the hedge funds, I do believe that the underperformance is so large that negative Alpha is much larger than the impact from fees. I think that most of the underperformance comes from hedging or shorting stocks/the market and likely some from bad picks. And what about the impact of predicting macro? So if you are trying to hedge to protect your portfolio or you are shorting to profit, you are quite likely going against a very strong headwind that may result in the same kind of underperformance as presented by Warren. Cardboard Link to comment Share on other sites More sharing options...
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