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How Norway spends its $882B global fund

economist.com

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Re: How Norway spends its $882B global fund

#71

Post by mehwoot »

xiaoma wrote: post #43
finstell wrote: post #11

Earlier quoted context omitted.

> 20-30-40% per annum, for over 20 years It is impossible, at least continuously. Nobody has ever managed to do that. You'd be lucky if you could beat the market by a few points on average over a 20 years time period. Compensation well for good performance does not make sense when you aren't penalized for losses.

That's just not true. Joel Greenblatt's fund beat an annualized return of 40% from 1985 to 2006. Carl Icahn got over a 30% per year annualized return from 1968 to 2011 . That's almost 50 years!

Joel Greenblatt's new funds that he set up since returning in 2009 haven't done well, they have performed below the S&P 500 Index from 2009-2015:

http://www.forbes.com/sites/antoinegara/2015/07/31/value-gur...

Re: How Norway spends its $882B global fund

#72

Post by mehwoot »

Gustomaximus wrote: post #66
alasdair_ wrote: post #54

Earlier quoted context omitted.

Right, and a lottery winner who wins a $500MM jackpot on a $1 ticket has annualized return of even more than that, when annualized over the same timescale. None of that matters if you can't pick the winning players in advance. With enough variance and enough players, someone will eventually have double-digit annualized returns over decades, it doesn't mean that they are necessarily superb investors.

The BIG difference is someone can go invest in Greenblatt or Icahn's fund with a reasonable expectation of these returns ongoing. Not so with a lottery winner.

Joel Greenblatt's new funds that he set up since returning in 2009 haven't done well, they have performed below the S&P 500 Index from 2009-2015:

http://www.forbes.com/sites/antoinegara/2015/07/31/value-gur...

Re: How Norway spends its $882B global fund

#73

Post by Retric »

greenleafjacob wrote: post #69
alasdair_ wrote: post #54

Earlier quoted context omitted.

Right, and a lottery winner who wins a $500MM jackpot on a $1 ticket has annualized return of even more than that, when annualized over the same timescale. None of that matters if you can't pick the winning players in advance. With enough variance and enough players, someone will eventually have double-digit annualized returns over decades, it doesn't mean that they are necessarily superb investors.

How would your position be falsified? You could always say that later someone will revert to the mean.

Simple, compare a large number of investors based on some criteria with the overall average.

AKA, if you think there are people that do better than average, then picking people who have beaten the odds for 10 years and see how they do over the next 10 years. Repeat over a few decades.

There are things that seem to work. The most common way to 'beat the market' is trading a low chance and ideally hidden chance of failure for inflated returns. EX: A 1 percent change of losing 95% of your investment should be worth lot's of money on good years. This is really appealing when investing other peoples money as you don't share in their downside.

Re: How Norway spends its $882B global fund

#74

Post by lemiant »

jellicle wrote: post #60
010a wrote: post #57

Earlier quoted context omitted.

The difference between $60k and $60M, for a fund nearly a trillion dollars large, is worth it if that person worth $60M can eek out even a few extra basis points in returns. Despite what many people believe, there are those out there who have an eye for value, and _can_ pick stocks.

> there are those out there who have an eye for value, and _can_ pick stocks. There's simply no evidence that is true at all. Every study of this issue says the exact opposite: there's no one out there who can pick stocks.

In general I've always agreed with this view. But I can't help but wonder how studies like this explain Berkshire Berkshire Hathaway.

Re: How Norway spends its $882B global fund

#75

Post by xyzzy123 »

lemiant wrote: post #74
jellicle wrote: post #60

Earlier quoted context omitted.

> there are those out there who have an eye for value, and _can_ pick stocks. There's simply no evidence that is true at all. Every study of this issue says the exact opposite: there's no one out there who can pick stocks.

In general I've always agreed with this view. But I can't help but wonder how studies like this explain Berkshire Berkshire Hathaway.

Which is funny because BH have literally the opposite bet: http://longbets.org/362/

It seems a bit contradictory, but BH is a holding company versus a hedge fund.

Re: How Norway spends its $882B global fund

#76

Post by bkanber »

Retric wrote: post #50
avn2109 wrote: post #14

Earlier quoted context omitted.

>> "...impossible..." https://en.wikipedia.org/wiki/Renaissance_Technologies "...famed for one of the best records in investing history, returning more than 35 percent annualized over a 20-year span..."

Which is still less than someone who bought dell stock at IPO and held for 9 years.

So?

Dell's market cap at IPO was $80M.

You can't just pick one good company to invest in. What would these funds do with the other, oh, $10Bn they need to invest?

Re: How Norway spends its $882B global fund

#77

Post by morgante »

webbore wrote: post #27
adventured wrote: post #16

Earlier quoted context omitted.

Continuously? Ok, perhaps that would be almost impossible, to pull off 20% for 20 years without missing a year. However, Buffett and Soros managed to average above 20% annual returns over 30 plus years. For example in the 1960s Berkshire returned 28.3% per year averaged. In the 1970s it returned 22.2% per year averaged. In the 1980s it averaged 39.1% (!) per year. In the 1990s it averaged 20.5% per year. Nobody would…

The thing about both Buffett and Soros is that they get deals that the general investor, or even really good and kinda famous investor, would never get. For example, Buffet did 300 million in unsecured loans (but with front-of-line payback) with Harley Davidson in 2009 at 15 percent, essentially to cover customer financing (i.e. cashflow) not because the company was in any real trouble. You and I would be lucky to fi…

It's important to note that this discussion is about a massive sovereign wealth fund, not the average investor.

I absolutely agree that the average person should stick to passive index funds. But if you have nearly a trillion dollars to invest, you'd be a fool to stick to passive strategies.

Re: How Norway spends its $882B global fund

#78

Post by bkanber »

shiven wrote: post #18
charlesdm wrote: post #6

Earlier quoted context omitted.

$60m isn't exactly the real cost to the government, though? Assuming this asset manager is a Norwegian resident, he'll pay a ton of tax (income or corporate tax, VAT, stamp duty on property purchases, capital gains, etc etc) on that money, and eventually given enough time, most will just flow back to the government. The house always wins.. Also, it depends on how much he brings in. For example, there are US based ass…

For example, there are US based asset managers with private funds that generate 20-30-40% per annum, for over 20 years. Pure Horseshit. Plain and simple. Or, in other words: "Pics. Or it didn't happen."

Warren Buffett, Carl Icahn, Michael Steinhardt, and arguably George Soros.

And those are just the popular ones that I know of, as a passive investor.

Re: How Norway spends its $882B global fund

#79

Post by terda12 »

Visiting Norway, I always thought it is kind of a weird country. On one hand it's one of the richest countries in the world. On the other hand, I've seen so many young Norwegian women work hard cleaning toilets and hotel rooms. Such jobs would be considered "low rung" at in the US but in Norway they treat their low rung jobs as something to be proud of.

Re: How Norway spends its $882B global fund

#80

Post by morgante »

harryh wrote: post #31
refurb wrote: post #30

Earlier quoted context omitted.

Norway also has foreign debt of greater than $600B or 75% of the Global Fund.

Interesting. Why do they choose to keep this money in a sovereign wealth fund instead of choosing to pay off their debt?

Because their return on investments in the fund should be higher than their debt interest.
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