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by ocfnash 3182 days ago
I think this article is attempting to make a different point.

It essentially argues (unconvincingly IMHO) that it is difficult to _distinguish_ a (very contrived type of) "perfect" active investor from a "bad" investor whereas Buffet argues that it is difficult to _be_ a good active investor.

These are not necessarily inconsistent but they do have opposite impacts on investment decisions.

To my mind this is dishonest marketing "research" whereas Buffet is making an important point.
1 comments
strebler 3182 days ago
Oh absolutely, I thought that type of active investor was so contrived that this was just an article written more or less for entertainment (to point out how hard it is to be an active investor).
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ocfnash 3182 days ago
Indeed. Reading my own words, I sound rather more worked up than I am :)

I do think this article is a bit sneaky dressing itself up as entertainment since it is published by a business that profits from people deciding to invest.

It does provide a means to illustrate the agency problem though.

If I had perfect knowledge of the future and had to buy and hold a given set of positions for myself for some fixed period, I would simply choose those that maximised my return at the end. HOWEVER if instead I had to invest on behalf of others (in return for some fee) and was subject to being fired, I would be tempted to choose a different (thus suboptimal) set of positions such as those with smallest drawdown / maximised minimum rolling quarterly Sharpe / ...

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Ntrails 3182 days ago
His underlying point is broadly right - "past performance is no guarantee of future success" and as such historical (which includes current at the time of making an investment decision) is a fairly poor predictor.

The argument that the fund research sellers peddle is that "we recommend based on the investment methodology in use, the processes, risk management, the people, etc etc". Otherwise what would they be doing that a simple google search couldn't?

Again, arguably far better metrics to find an active fund that will on average out-perform. They're not wrong.

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