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George Soros Track Record
- Thread starter lasner
- Start date
For those interesting, although not a book on Soros, this is a good collection of interviews with many global macro traders http://www.amazon.com/Inside-House-Money-Traders-Profiting/dp/0471794473.
Highly recommended.
Highly recommended.
Quote from makloda:
Yes, all those hedge funds investors are completely idiots. They don't know how they're handed the short end of the stick and some clown on a trading forum has it all figured out and is so much smarter than some of the richest and oldest families in the world who happily allocate part of their assets to hedge funds.
Hedge funds in general operate on the aura of mystique and exclusivity, couple that with kid glove hand holding and sure it certainly has an appeal to some rich people just like the mark blithely enjoys the grifters set up.
True smart money gravitates towards running a hedge fund or investing with DFA mutual funds.
Ignorant or high maintenance customers pay higher fees for that privilege and thus gravitate towards being hedge fund customers.
The reason for this is easy to see as the problem is quite well explained by Sharpe:
"Active and Passive Investing
As you can see, the manger of an index fund doesn't have much to do. For this reason we call indexing "passive investing". The alternative is, not surprisingly, "active investing". Active investment managers don't want to buy all the stocks in a market, only the ones that they consider attractive. And since attractiveness changes as information and market prices change, this involves relatively frequent buying and selling -- hence the term "active".
Let's think a bit about the performance of active and passive strategies. Assume that you in this room constitute the entire universe of investors in the French stock market. About a fourth of you will be passive indexed investors, while the rest will be active investors. Collectively you hold all the stock on the French market. Now let's pick a time period -- say a year. And let's say the market as a whole returned 10.0% in that year. Before costs, what did each passive investor get? Exactly 10.0%. Obviously, before costs that average passively managed Euro returned exactly 10.0%.
What about the active investors? One might have made 15.1%, another 3.4%, yet another -23.0%, and so on. But what did the average actively managed Euro invested in the French stock market return before costs? The answer has to be exactly 10.0%. Why? Because the passive part returned 10.0% and the total market returned 10.0%. So the active part had to return the same.
We conclude then that in the French stock market the average actively managed Euro must have the same return before costs as the average passively managed Euro.
But before-cost returns aren't what matters. You don't eat before-cost returns. What you eat depends on returns after costs and, for that matter, after taxes. So let's consider costs and taxes.
The people running index funds are dull but they are cheap. They only need to know the names of securities in a market and the number of shares outstanding. You would not want to be stuck at a cocktail party with one of them. But their costs are minimal. Depending on the market replicated, the cost of managing an index fund should be somewhere between 0.15% and 0.50%, or 15 to 50 "basis points", using financial jargon.
Active managers are very different. They do research on companies, try to untangle the web that corporate officers and accountants sometimes weave, try to predict acceptance of future products, and so on. Their security analysts and portfolio managers are smart, well educated, and fascinating conversationalists at cocktail parties or anywhere else. But they and their activities are expensive. Their costs are likely to be at least 1.0% (100 basis points) higher than those of passive managers in the same markets.
Worse yet, the very activity that these managers undertake adds to costs. Brokers have to eat too, and many active stock funds sell stocks within 6 to 12 months after they buy them.
This is not all. Taxable investors have yet another reason to worry about active management. It generates realized capital gains far more frequently than does passive management. This requires the payment of taxes that could otherwise be either deferred or, in some cases, avoided entirely.
The bottom line is that after costs, the average actively managed Euro (or dollar, or yen) must underperform the average passively managed Euro (or dollar, or yen) in a market. This is simple arithmetic. And this is the basis for the assertion that indexed investing provides a way for you to beat the average investor in a selected market.
How big is the advantage for this approach? It depends on the index fund and the expenses of the active managers. "
http://www.stanford.edu/~wfsharpe/a...d_investing.htm
Just because someone is rich or the family has generational wealth does not make them automatically financially astute.
As a matter of fact the wealthier they are the more likely they are to survive bone headed moves anyway.
Quote from makloda:
Going back to Jan 1987 through Oct 2009, Soros (Quantum Endowment NV A1 Restricted USD) has an annualized return of 20.3% annualized, net of fees, easily earning Soros a spot among the most successful speculators of the last 30 years.
I find it kinda interesting that the bar is set so low (20.3% for 22 yrs) for "earning ... a spot among the most successful speculators ".
Ill have to keep those stats in mind in my "take the Index Piker challenge" because it's a rate of return that certainly appears within reach for me to achieve in a 10 yr period.
Although My goal of annualized returns is 15% or greater: 20.3% appears high but within plausible range.
great video
What you don't realize is that it makes sense to allocate PART of ones capital to hedge funds (not all). Many HNW investors would allocate e.g. 20-40% of their capital to hedge funds/CTAs, 20-40% to indexed equity ETFs/mutual funds and another 20-40% to bonds/income investments.Quote from Index piker:
Ignorant or high maintenance customers pay higher fees for that privilege and thus gravitate towards being hedge fund customers.
Look up Harvard and Yale endowment portfolios.
Just because you pay only 0.15% fees in an indexed equity ETF doesn't mean that investment is superior in all circumstances to a higher fee product.
The key is the long period. You will find it incredibly difficult to deliver constant high returns without big downside volatility over a long period (say 10-20 years).Quote from Index piker:
I find it kinda interesting that the bar is set so low (20.3% for 22 yrs) for "earning ... a spot among the most successful speculators ".
Ill have to keep those stats in mind in my "take the Index Piker challenge" because it's a rate of return that certainly appears within reach for me to achieve in a 10 yr period.
Although My goal of annualized returns is 15% or greater: 20.3% appears high but within plausible range.
Also don't forget Soros' 20% over 20 years is net of fees. Internally, his trades generated closer to 25% annually.
Quote from makloda:
What you don't realize is that it makes sense to allocate PART of ones capital to hedge funds (not all). Many HNW investors would allocate e.g. 20-40% of their capital to hedge funds/CTAs, 20-40% to indexed equity ETFs/mutual funds and another 20-40% to bonds/income investments.
Look up Harvard and Yale endowment portfolios.
Just because you pay only 0.15% fees in an indexed equity ETF doesn't mean that investment is superior in all circumstances to a higher fee product.
So now I have ground your answers down from:
quote from makloda
2) 3) Why comment when it's obvious you have no idea what you're talking about?
to:
quote from makloda
some of the richest and oldest families in the world who happily allocate part of their assets to hedge funds.
and finally it's just boils down to:
Quote from makloda:
Look up Harvard and Yale endowment portfolios.
That's just hilarious and really searching for the needle in a haystack to justify the lousy record of hedge funds.
1) Endowments have basically an infinite time horizon, which is very different than most hedge fund customers. I'll grant you that some ultra rich families possess the same horizon.
2) HARVARD AND YALE pay whole teams of researchers millions as a full time job to find alternate assets that fit their portfolio.
a)very few people or groups can afford to take due diligence to such a level and even less so ,skillfully. The rarity of finding a swenson so that you can find a soros is astronomical . Due diligence of this level is like comparing a bottle rocket to the Challenger. The average hedge fund customer is a mark albeit a rich one.
b)Even with all this exceptional situation, infinite horizon best due diligence teams and research money can buy and guess what: They are STILL stuck with large losses in any one particular year. It's just the nature of the beast and it's a story of risk .
If you want higher returns you pay for in it in volatility no exceptions.
I'll say it again in case you folks missed it.
The average hedge fund customer is a mark albeit a rich one.