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Nevada’s public employee pension fund invests passively and beats peers (2016)

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Re: Nevada’s public employee pension fund invests passively and beats peers (2016)

#181

Post by joe_the_user »

emacdona wrote: post #120
bandyaboot wrote: post #113

Earlier quoted context omitted.

You’re probably aware that no fund manager would accept your offer. But it doesn’t prove that they don’t think they can beat the market (as misguided as that belief might be), it just means they’re not willing to take on an absurd amount of risk to prove it.

I don't think the risk is "absurd". Or, at least it's no different than the risk they ask any investor to take by charging them 1% of their portfolio for it to be "actively managed". Plus, they are being compensated. I'm offering 90% of the returns above the index :-)

The risk your (completely hypothetical) offer would involve is reputational. There's no reason for a funds manager to ever risk their reputation on your stunt since they are constantly risking money and reputation in the ways that they control. Indeed, one could almost certainly put together a bet similar to yours using derivatives and have the potential upsides and downsides without the reputational damage.

Of course, if you offered your bet to all comers and gave significant publicity, unknown "funds managers" would be happy to take you up, though they might well default if they lost.

Re: Nevada’s public employee pension fund invests passively and beats peers (2016)

#182

Post by Cthulhu_ »

zeroonetwothree wrote: post #139
dralley wrote: post #109

Earlier quoted context omitted.

I've done well (39% annual returns) investing in 2-3 individual stocks in addition to index funds for the rest of my investments. More than that would be IMO too much to pay attention to. Admittedly my choices for stocks are a bit on the high-risk side, but it's worked out well so far. Picking up lots of AMD in 2017, and Rivian 6 weeks ago, seems to have been decent calls.

Sorry but I never believe these online claims given with no evidence about ridiculously high returns. It’s not to say you are lying but it’s easy to miscalculate these things.

Anecdotally I can confirm there's been a few 40% years in the past decade, but it really is a gamble, and because of survivorship bias it's easy to only hear about the ones that gained and not the ones that lost.

Re: Nevada’s public employee pension fund invests passively and beats peers (2016)

#183

Post by Cthulhu_ »

nxobject wrote: post #35
hindsightbias wrote: post #8

Fund was up to $55B in 2022, but they made him take a roomie https://thenevadaindependent.com/article/lawmakers-approve-d...

Oh, that's funny... apparently to reduce the risk of there just being one person.

Which is fair, see https://en.wikipedia.org/wiki/Bus_factor

Re: Nevada’s public employee pension fund invests passively and beats peers (2016)

#185

Post by ImPostingOnHN »

DistractionRect wrote: post #169
emacdona wrote: post #126

Earlier quoted context omitted.

I think this gets at a deeper point I'm trying to make. If you truly can consistently beat the market, you are already making a killing with your _own_ money. If you want to use _my_ money to place your bets (presumably b/c you want to leverage your market beating ability), I want a guarantee (because I'm more than happy to take the return of the index).

I follow, essentially you're viewing it like a loan + interest + a minor stake in the venture. If the venture fails, you still expect to repaid loan + interest and your stake in the venture is worth $0. Unfortunately no one will agree to this as long as everyone else is willing to invest _and_ shoulder the risk

It sounds like they're simply critically evaluating the claims of beating the market.

If you can't beat the market with your own money, you shouldn't be trying to do it with someone else's.

If you can beat the market with your own money, why are you so worried about the downside? There should be little risk for someone who claims to be able to beat the market.

If they say that's too much risk, they likely don't think they can consistently beat the market.

Re: Nevada’s public employee pension fund invests passively and beats peers (2016)

#186

Post by dkekenflxlf »

financltravsty wrote: post #167
emacdona wrote: post #104

To any fund manager out there that truly believes you can beat the market, here is how you can sell me your fund: We agree on an index and a time frame. You guarantee me the same return as the index within that time frame. If you beat the index, you keep 90% of returns ABOVE the index (and I get 10%). We both win, and you win big. If you don't beat the index (within the time frame), you make up the difference (so I g…

You are not an UHNW individual/institutional investor, so no "fund managers" of any note are going to waste their time on this wager. "Beating an index" is really easy. Up to $10MM you can choose most any financial instrument class in the U.S markets and have a good probability of finding alpha for a long time (that would beat the S&P500 18.40% YTD). Many proprietary trading firms, or market makers, or quantitative t…

++1!!

Re: Nevada’s public employee pension fund invests passively and beats peers (2016)

#187

Post by Findeton »

p_j_w wrote: post #138
Findeton wrote: post #132

Earlier quoted context omitted.

In general hard working prudent value investors are able to beat the index. It's just that those are very few. I mean Buffet has done it for half a century, that's not a coincidence.

Given the statistics and number of investors involved, it seems like an absolute certainty that a few people would beat the index for the entirety of their lives simply by chance.

Yes some people might do it by chance. Some other people, they do it by knowledge.

Re: Nevada’s public employee pension fund invests passively and beats peers (2016)

#188

Post by Mistletoe »

jacobsimon wrote: post #165
Mistletoe wrote: post #153

Earlier quoted context omitted.

https://www.aqr.com/Insights/Perspectives/Value-Spreads-Back... I’d be cautious that you are about to get a wicked mean reversion.

Yeah to clarify, I don’t necessarily recommend (or even follow) this strategy, I still mostly invest in passive index funds.

Ah I see, carry on then!

Re: Nevada’s public employee pension fund invests passively and beats peers (2016)

#189

Post by trpotter72 »

dv_dt wrote: post #161
ProjectArcturis wrote: post #158

Earlier quoted context omitted.

The point of actively managed funds is not so much to "beat the market", it's to provide diversified returns via strategies that are uncorrelated with the market. On average, the S&P500 has returned about 7% annually. If I had a strategy that returned 5% on average but was totally uncorrelated with the S&P, then you'd get the best overall long-term returns (maximize the geometric average of annual returns) by investi…

Well then you could establish a simiar pay critera that beats the s&p 500 during recessionary moves of the index. Im guessing you wouldn't get many takers

Uncorrelated returns is the key here, not inverse.

Re: Nevada’s public employee pension fund invests passively and beats peers (2016)

#190

Post by daedrdev »

ProjectArcturis wrote: post #158
emacdona wrote: post #104

To any fund manager out there that truly believes you can beat the market, here is how you can sell me your fund: We agree on an index and a time frame. You guarantee me the same return as the index within that time frame. If you beat the index, you keep 90% of returns ABOVE the index (and I get 10%). We both win, and you win big. If you don't beat the index (within the time frame), you make up the difference (so I g…

The point of actively managed funds is not so much to "beat the market", it's to provide diversified returns via strategies that are uncorrelated with the market. On average, the S&P500 has returned about 7% annually. If I had a strategy that returned 5% on average but was totally uncorrelated with the S&P, then you'd get the best overall long-term returns (maximize the geometric average of annual returns) by investi…

My impression though i that most of these firms are highly correlated with the market despite their attempts at otherwise
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