The 2+2 Hedge Fund

[zaxx19]

Want to make 7% guaranteed...

Build a hedge fund based on stocks who benefit solely from a weak dollar...then take out the weakest charts and PE ratios. You'll make 7% ....probably more.

[snowlarbear]

so basically we're backing people better than us.

this reminds me of the MIT Blackjack team. Hopefully our players won't complain we're getting too large of a cut.

[stinkypete]

[ QUOTE ]
If these minds are as smart as you think they are, then they will realize that you can not beat the general market index in the long run. This has been proven time and time again. Two professors from Princeton I believe ran a study and concluded that the entire universe of mutual funds(you can substitute hedge fund in here also) underperformed the market by 1.4 % over a thirty year period. They even took into account fund closures, mergers, etc. Can you guess what the 1.4% average underperformace represents? Yep - that was the average fund expense ratio!!! Thus fund managers add no value whatsoever! Sklansky and the rest of the two plus two "brilliant" minds may know poker and a lot of other things, but you are basically wasting your time trying to beat the market. Yes - there may be a few exceptions you can count on one hand: Julian Robertson, Soros, Buffett, Michael Steinhardt, but you're better off just buying spyders and playing more poker my friend.

[/ QUOTE ]

If these minds are as smart as you think they are, then they will realize that you can not beat poker in the long run. This has been proven time and time again. Two professors from Princeton I believe ran a study and concluded that the entire universe of poker players(you can substitute hedge fund in here also) underperformed breaking even by 1.4% over a thirty year period. They even took into account card room closures, mergers, etc. Can you guess what the 1.4% average underperformace represents? Yep - that was the average rake!!! Thus poker players add no value whatsoever! Sklansky and the rest of the two plus two "brilliant" minds may know poker and a lot of other things, but you are basically wasting your time trying to beat poker. Yes - there may be a few exceptions you can count on one hand: Barry Greenstein, Phil Ivey, Doyle Brunson, but you're better off just buying spyders and playing the stock market my friend.

[cwsiggy]

That was quite funny, and it is interesting to compare the two. I suppose one can argue that most people do not "beat" the game of poker and only a handful make a killing, just like only a handful of "market wizards" beat the S&P 500. I can assure you that most "smart" people who work on Wall Street and I know an awful lot of them, invest their personal funds in Spyders only!!!!!! Thanks for the funny post though. I would bet that even Sklansky would agree with my post.

[Freudian]

So basically you want us to hand over our money to someone who we don't know has ever dealt with stock. And you consider it a done deal that he will make a lot of money?

Seeing how infatuated Sklansky is with the concept of math majors ruling the world, there is a pretty good chance he would blow it all on some MIT math major with a lousy business idea.

[Vince Lepore]

[ QUOTE ]
you're better off just buying spyders and playing more poker my friend.

[/ QUOTE ]

I don't know for sure but if I were a betting man I'd bet that you are correct.

Vince

[felson]

There was already a thread comparing the stock market and poker. It's a poor comparison. In poker, you're only competing against the 9 other players at the table, not millions of investors. So there's no reason to think the poker "market" should be efficient.

[TStoneMBD]

im still confused, but i voted no to your poll as soon as the thread came out because id much rather invest in buffets fund than a professional poker player. i bet sklansky is smart enough to know that he wouldnt even invest in himself if given the opportunity. the funny thing about this forum is that there are so many brainless trolls that more people voted yes to investing in sklansky than no, but i would bet you that no more than 2 of the 16 that said yes would pony up the money.

[stinkypete]

my point was that a good investor can beat the market the same way that a good poker player can beat a poker game. and you don't need to be one of the top few in the world... just as long as you're somewhat smarter than your average investor, you'll make more money than average.

that also means that a good fund manager can beat the market by more than the fund's expense ratio, just like a good player can beat the rake. the percentage of fund managers that can do this is very small, but so is the percentage of poker players that can beat the rake.

the analogy is just so perfect i had to point it out.

i would bet that even sklansky would agree with my post.

[fnord_too]

Out of curiosity, do you know what hedge funds are?