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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

#141

Post by Iron_Maiden_666 »

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.

There are people who beat the market all the time. If that is what you're referring to.

Re: How Norway spends its $882B global fund

#142

Post by forgetsusername »

ktRolster wrote: post #107
lemiant wrote: post #74

Earlier quoted context omitted.

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

Berkshire Hathaway did well to begin with, but Warren Buffet is able to get really good deals buying companies because he has a reputation as a good manager. Since he is easy to work with, founders sell cheaper.

>Since he is easy to work with, founders sell cheaper.

This requires a source. Many of the companies he purchases are public companies. If they are selling "cheaper" because they like Mr. Buffet, there's a problem.

Re: How Norway spends its $882B global fund

#143

Post by forgetsusername »

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!

>Carl Icahn got over a 30% per year annualized return from 1968 to 2011. That's almost 50 years!

Citation? This would turn a $10,000 initial investment into $13BB. I have a hard time believing that.

Re: How Norway spends its $882B global fund

#144

Post by sleepyhead »

terda12 wrote: post #79

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.

Two things are to be noted here: 1) Even "low rung" jobs pay a decent salary. That's the main reason why everything is so more expensive here even compared to Sweden. 2) Cleaning staff is probably the industry with the highest number of foreigners, either new refugees or EU-immigrants. So it depends on your definition of "Norwegian woman", i'd argue most of these workers were not born in Norway.

Re: How Norway spends its $882B global fund

#145

Post by eivarv »

tomp wrote: post #113
tormeh wrote: post #105

Earlier quoted context omitted.

Obviously someone has, but I want to know the results.

You can't just "toss a NN to stock market data" and expect good results. There's too little historical data, you can't easily "generate" more data for the network to learn from, making it really easy to overfit. In other fields (e.g. computer vision) a lot of research has been focused on inventing techniques that prevent overfitting, thus enabling "learning" (i.e. generalization of patterns), such as dropout, convolu…

Dropout can certainly be applied generally - it's useful as a regularization technique (especially in wide and deep networks) to combat overfitting in other fields than computer vision.

CNNs can be used in other fields as well.

Re: How Norway spends its $882B global fund

#146

Post by bkanber »

Retric wrote: post #85
bkanber wrote: post #76

Earlier quoted context omitted.

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?

These funds are not getting that kind of returns on 10B. Often you see "fund not seeking additional investment."

That's my point. When you have so much money to invest you (are forced to) capture a more representative slice of the market and regress closer to the mean.

Re: How Norway spends its $882B global fund

#147

Post by hodder »

alasdair_ wrote: post #54
xiaoma wrote: post #43

Earlier quoted context omitted.

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!

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.

Buffett has actually picked the winners in advance in his great essay:

http://gdsinvestments.com/wp-content/uploads/2015/07/The-Sup...

That said, a fund this size should be taking as passive of an approach as possible.

Re: How Norway spends its $882B global fund

#148

Post by zrail »

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.

That's actually not true. A study came out in March of this year that describes a simple screen: low fees + high manager ownership of the fund. Active funds passing the screen beat the S&P 500 55% of the time and have a higher average return over a 20 year time period.

That said, you have to hold for a long time to see that edge. If you don't the odds go negative again.

http://www.investmentnews.com/article/20160318/FREE/16031992...

Re: How Norway spends its $882B global fund

#149

Post by mbrameld »

hansjorg wrote: post #98
RestlessMind wrote: post #90

Earlier quoted context omitted.

I (sincerely) wonder - what would happen if USA were to receive such a short-duration windfall? Will it be socked away in a rainy day fund, or will it be spent immediately in terms of infrastructure programs, or welfare programs or tax cuts/rebates? In fact, California experienced such a windfall due to rising stock prices in recent years, and Jerry Brown had to fight with the legislature to save that in a rainy day…

See e.g.: https://en.m.wikipedia.org/wiki/Alaska_Permanent_Fund The fund pays a yearly dividend to permanent residents. The article also mentions that one of the reasons for setting up the fund was dismay with how the initial $900 mill. of oil income was spent.

Now research the current state of the fund, there is a bit of controversy going on right now. The governor has unilaterally limited the payout this year and a lot of folks aren't happy.
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