[alehul]

To offer a better and less political answer: the reason that an UHNWI doesn't park their entire net worth in an index fund is because there is some probability, however minute, that the markets will collapse and never recover.

Additionally, we could say that success in active investing is (often) a function of how much you're willing to spend to find the right opportunities. For an UHNWI, this is likely enough to beat the market, especially if a high percentage of investors are passive, leaving more opportunities for corrections open.

As another commenter said, the goal is usually to avoid becoming poor first and foremost, rather than becoming richer.

[philwelch]

> To offer a better and less political answer: the reason that an UHNWI doesn't park their entire net worth in an index fund is because there is some probability, however minute, that the markets will collapse and never recover.

Sure, but it seems like the solution to that isn't "new and innovative private investments", it's "invest more money in treasury bonds from stable first-world governments and maybe precious metals".

[petra]

>> we could say that success in active investing is (often) a function of how much you're willing to spend to find the right opportunities

Is this also true at the level of the small investor ?

Say I'm willing to spend a few hours a day learning and researching about stocks. Does this mean that over time, I'll be able to significantly beat the index funds ?

Or is it, more likely, a fool's errand, because that as a small investor, I don't really have enough bandwidth and money to significantly diversify ?

[compiler-guy]

It's a fool's errand. There are people who spend 80 hours a week doing this kind of analysis at firms that pay millions of dollars a year for the most sophisticated data and analysis, and those folks still don't beat the market more than randomly. These firms pay hundreds of millions of dollars to improve their trading systems' latency by just a few milliseconds.

You don't have a chance unless you are doing the same amount of work with more sophisticated tools, with the same trading tools.

You might win based purely on chance, but you are extremely unlikely to.

[jjeaff]

I'll just add my agreement. Fool's errand.

Some of the high frequency traders can rake it in. But they are using teams of highly paid analysts to look for opportunities and those opportunities don't last long before they have to move on to the next thing. And I would assume it's getting harder and harder for them as time goes on and more enter that market.

[auiya]

> there is some probability, however minute, that the markets will collapse and never recover.

This is why people invest some money, however minute, into shorting the entire stock market.

[Scoundreller]

Why have equal and opposing holdings when you could hold cash?