It’s Supposed To Be Hard
Collab Fund
In 1990, David Letterman asked his friend Jerry Seinfeld how his new sitcom was going.
Every investor knows, or should know, the truth about money management: More than 80% of professional investors underperform their benchmark (more depending on how you calculate it). Those stats are used in an often cynical way to show how the industry is broken, crowded, and ineffective. But wouldn’t it be weirder if it were different?
Wouldn’t it be strange if every slightly ambitious investor could pick a few stocks and earn returns capable of generating dynastic wealth with other people’s money? Or even most of them? How and why could that world possibly exist? The reason Warren Buffett is interesting is because there’s only one of him.
Professional investors generally need other people’s money to invest…There is more collateral damage in investing than other pursuits.
The barriers to entry in investing are low. There are now more than 16,000 mutual funds and 10,000 hedge funds in the US. For perspective there are 15,444 Starbucks locations in the U.S. It’s inevitable that the vast, vast, majority will be mediocre at best.
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