
Making Monkeys Out of the Sohn Investing Gurus - prostoalex
https://www.wsj.com/articles/making-monkeys-out-of-the-sohn-investing-gurus-11557115260
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zetazzed
I'm curious - do any HN readers invest heavily in actively-managed mutual
funds or hedge funds where you aren't personally involved? I feel like it has
become a widely-held belief among young, somewhat-affluent techies that index
funds are the way to go, with some preferring to pick their own stocks and
very few willing to pay significant management fees for someone to pick their
publicly-traded equities. But maybe I'm wrong here? Anyone care to share your
pro-active-management reasoning?

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arx1422
I'll add that some of these sentiments are cyclical. We have been in an
environment for the past half decade where the greatest engines of growth were
the megacap leading tech companies. When the largest are in the lead like that
it is difficult to differentiate versus the indices. Second, this has been a
tremendous bull market. In this kind of market nearly every hedge is a bad
hedge which doesn't mean it wasn't a very prudent hedge ex ante.

A flat market is in many ways the best place for actively managed long-short
funds to differentiate themselves. Given where overall market valuations are
we are probably past the point of double digit market gains for a while
(although I could have said that years ago). So I think that skillful active
managers will be better positioned. That said, I recognize that I am an active
manager so 1. I may be talking my own biases but 2. I think I can
differentiate real investment skill from charlatans, which is very hard for
even very smart non-professional investors

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eej71
Do you feel that your approach beats a common benchmark over a ten year
period?

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arx1422
Empirically I have outperformed over the past two decades. But lets qualify
that the backdrop market environment matters. If the market surges straight up
12-18% a year for years on end I will tend to drag. As a value oriented
investor I get less interested when valuations are higher which admittedly can
cause underperformance if momentum keeps pushing things up. You can't get off
the train too early. I saw too many of my peers think the bull ride was over
in 2012/2013 because they got too anchored to post-crisis valuations and
failed to see normalized valuations as appropriate.

When the market churns flat I tend to outperform because I have a sizable
yield component and my individual name alpha shows its strength. When the
market crashed in 2008 I ended up the year on short positions so that really
impacts longer run outperformance. In December I went on a shopping spree
after being defensively positioned into it which left me much better off than
if I had passively been long the whole time.

My point is that no one strategy fits all investing risk thresholds or
environments. I like to aim for a nice 7-12%/yr with minimal drawdown
volatility and hedges against nasty things happening. I look "stupid" if the
market is up 20% in a given year and I am not. Over the longer term nasty
things seem to happen every X years which has vindicated the approach thus
far.

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nimithryn
This doesn't surprise me at all. I'd posit that it is only in the interest of
these "gurus" to reveal their stock picks when they are ready to unload them -
i.e. when they think the opposite of whatever they are predicting is going to
come true.

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noplat
Throwing darts actually is a viable investment strategy, since it overweights
smallcap stocks (everything is equally weighted, after all) and it is known
that those outperform largecaps in the long run.

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RickJWagner
Once again, Buffet, Bogle, etc. are proved right. Indexing is the way to go.

For those interested: Check out bogleheads.org. It's a blueprint for wealth,
the slow and safe way.

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tw1010
Thought it said "Making Money Out of the Sohn Investing Gurus". I guess both
makes sense.

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JohnJamesRambo
Really wish I could read this article...

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anonu
Can anyone link to the article w/o paywall?

(Still don't know why we allow WSJ articles on HN)

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deckar01
Search the URL on Google. The AMP mirror coming from a Google domain bypasses
the nag.

