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Innovation Is Inherently Controversial

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Re: Innovation Is Inherently Controversial

#21

Post by fairity »

inthewoods wrote: post #17
fairity wrote: post #8

Earlier quoted context omitted.

> Generally speaking, once a fund reaches the level outperformance of ARK, they underperform the market. Source for this? It would make sense to me if your claim was that future performance for this cohort is average. But, you seem to making a stronger claim -- that is, this cohort of outperforming funds performs worse than average going forward.

You can find lots of research on it but first, between 85-90% of actively managed investment funds underperform their benchmark: https://www.ifa.com/articles/despite_brief_reprieve_2018_spi... That means it is very, very hard to outperform. Then, if you do outperform, that tends to be an exceptional year followed by not so great results. https://www.morningstar.com/articles/1017292/what-to-expect-... Key comment: "Of…

Interesting read, but the data seems extremely skewed.

Quote from the same article: "Eighty-eight of the 123 funds were go-go tech/Internet darlings that soared in 1999 but crashed after, losing 24.1% per year from Jan. 1, 2000, to Dec. 31, 2002."

So, it seems like the data comprising the "after-years" is highly skewed towards years when the overall market crashed, which explains the negative returns.

If your claim is true, shouldn't there be a fund that simply indexes the broad market minus top performing hedge fund holdings? If not, why not?

Re: Innovation Is Inherently Controversial

#22

Post by smoldesu »

wearywanderer wrote: post #20
smoldesu wrote: post #15

Earlier quoted context omitted.

By that logic, all cars are really just a subset of human-operable motorized transport devices. It's much less impressive if you look at it that way, right?

> human-operable motorized transport devices Also known as 'automobile' or 'motor vehicle.' Cars are really just a subset of automobiles. It's less weird when you phrase it like that, using established terminology, right?

And now we've come full circle. That was my original point: we can abstract technologies like this into their original components, but it doesn't do any good to do so.

Re: Innovation Is Inherently Controversial

#23

Post by internetslave »

inthewoods wrote: post #18
internetslave wrote: post #11

Earlier quoted context omitted.

You just made this up. I’m tired of people who don’t understand investing writing these aphorisms about it

No I didn't - it's easy to research. See the articles I reference above.

I work in the industry. Generally the winners keep winning. The same funds are always the top fund

Re: Innovation Is Inherently Controversial

#24

Post by wearywanderer »

smoldesu wrote: post #22
wearywanderer wrote: post #20

Earlier quoted context omitted.

> human-operable motorized transport devices Also known as 'automobile' or 'motor vehicle.' Cars are really just a subset of automobiles. It's less weird when you phrase it like that, using established terminology, right?

And now we've come full circle. That was my original point: we can abstract technologies like this into their original components, but it doesn't do any good to do so.

What you call "abstract technology to their original components", I call understanding the historic context of technology.

I think there is a lot of value in understanding that context. Without looking at that historic context, people are more likely to let their imaginations run wild and inadvertently come to believe things that aren't true (a significant portion of the general public believe Henry Ford invented cars...) or come to view technologies with an unwarranted level of awe and tunnel vision (the way 3d printing seems to be viewed by some, as mystical Star Trek replicator technology that came out of nowhere.) More generally, if people don't understand the true historic context of technology they become more likely to believe things that aren't true about technology. There is inherent value in dispelling myths and providing historic context for technology does exactly that.

And why is it important to break a technology down into it's constituent fundamental traits or properties? Because almost always the historical context of a technology includes technologies that did not share the same name. If you're talking about the history of cars but limit the scope of your consideration to things called cars, you won't get back much further than the 1890s. But if you break the concept of a car down, it becomes clear that you need to consider the history of wheeled vehicles and the history of motorized vehicles. Self-propelled traction engine are one of the conceptual predecessors to the machines we now call cars. They share 'abstract concepts' with cars (a wheeled vehicle, not on rails, which can move around under its own power), but not a name. Traction engines aren't cars, but are important historic context for cars. If you aren't willing to consider the abstract attributes that constitute a car, you cannot consider the true historic context of cars.

Re: Innovation Is Inherently Controversial

#25

Post by rriepe »

wearywanderer wrote: post #19
danboarder wrote: post #7

From the article: "3D printing is really a subset of autonomous technology and robotics." Interesting to pick up on how she maps investments across "innovation themes" like robotics, AI, etc admittedly without deep domain knowledge herself, depending on the input of analysts.

> "3D printing is really a subset of autonomous technology and robotics." I'm confused, is this an objectionable statement? A lot of people seem to treat 3d printing as something truly special and unique, but actually 3d printing is a form of CNC; additive rather than subtractive like a CNC mill, but a form of CNC nonetheless. It's a technology firmly rooted in a broader tree of established technologies. I guess some…

Wouldn't 2D printers then also be a subset of autonomous technology and robotics?

Re: Innovation Is Inherently Controversial

#26

Post by inthewoods »

internetslave wrote: post #23
inthewoods wrote: post #18

Earlier quoted context omitted.

No I didn't - it's easy to research. See the articles I reference above.

I work in the industry. Generally the winners keep winning. The same funds are always the top fund

So you're saying the same funds always have the top performance? Or have the top AUM? And are you talking about hedge funds or mutual funds?

Re: Innovation Is Inherently Controversial

#27

Post by internetslave »

inthewoods wrote: post #26
internetslave wrote: post #23

Earlier quoted context omitted.

I work in the industry. Generally the winners keep winning. The same funds are always the top fund

So you're saying the same funds always have the top performance? Or have the top AUM? And are you talking about hedge funds or mutual funds?

Yes the same funds usually are the top ones. There’s one offs like people who made money in 2008 etc. but it’s the same people always beating the market. The industry is really small, I don’t need a false and misleading academic study

Re: Innovation Is Inherently Controversial

#28

Post by inthewoods »

fairity wrote: post #21
inthewoods wrote: post #17

Earlier quoted context omitted.

You can find lots of research on it but first, between 85-90% of actively managed investment funds underperform their benchmark: https://www.ifa.com/articles/despite_brief_reprieve_2018_spi... That means it is very, very hard to outperform. Then, if you do outperform, that tends to be an exceptional year followed by not so great results. https://www.morningstar.com/articles/1017292/what-to-expect-... Key comment: "Of…

Interesting read, but the data seems extremely skewed. Quote from the same article: "Eighty-eight of the 123 funds were go-go tech/Internet darlings that soared in 1999 but crashed after, losing 24.1% per year from Jan. 1, 2000, to Dec. 31, 2002." So, it seems like the data comprising the "after-years" is highly skewed towards years when the overall market crashed, which explains the negative returns. If your claim i…

Most active manager performance is mean reverting. They have a good year, and then there is little evidence of persistence in their future returns. Here's a larger study from S&P:

https://www.spglobal.com/spdji/en/documents/research/researc...

"We observe little to no evidence of performance persistence among active managers, except in the large-cap value and real estate categories. For example, out of 1,034 large-cap funds that existed in the universe as of Sept. 30, 2013, only 19.73%, or 204 funds, outperformed the S&P 500. In the following year, 15.69% of those 204 funds outperformed the benchmark. By the end of the third year, none of those original 204 funds were able to outperform the S&P 500 on a consecutive basis."

What is implied from this data is that if a manager has a good year, they are unlikely to match it going forward. So only 20% beat an index, and then only 16% of those that did beat it the next year.

Re: Innovation Is Inherently Controversial

#29

Post by inthewoods »

internetslave wrote: post #23
inthewoods wrote: post #18

Earlier quoted context omitted.

No I didn't - it's easy to research. See the articles I reference above.

I work in the industry. Generally the winners keep winning. The same funds are always the top fund

That's great but you didn't answer one question I asked - mutual funds or hedge funds? AUM or performance?

Re: Innovation Is Inherently Controversial

#30

Post by jazzyjackson »

rriepe wrote: post #25
wearywanderer wrote: post #19

Earlier quoted context omitted.

> "3D printing is really a subset of autonomous technology and robotics." I'm confused, is this an objectionable statement? A lot of people seem to treat 3d printing as something truly special and unique, but actually 3d printing is a form of CNC; additive rather than subtractive like a CNC mill, but a form of CNC nonetheless. It's a technology firmly rooted in a broader tree of established technologies. I guess some…

Wouldn't 2D printers then also be a subset of autonomous technology and robotics?

From one angle, by looking at the bill of materials comparing a inkjet and makerbot, they both look like robots

But from another angle, printing and publishing paper is a different industry than manufacturing objects, so the distinction is in their context

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