[mlevental]

i've been thinking about your comment for about 12 hours now (over night after reading it last night). i don't quite understand the force of it.

>If a fund earns 80% returns, but has no means to compound the resulting profits through the same mechanism, whoever receives them naturally puts them into something with worse returns, so their wealth still grows slowly over time.

i don't see why this matters at that AUM. treat it as a fixed annuity for the fund members and it's still fantastically successful (if you know of a savings account that i can safely withdraw 80% of 10b from every year for 20 years please let me know).

>Even within the fund structure, most profit is return on labor, not capital.

i think this is just a matter of "levels of abstraction". if i invest in a mutual fund that has portfolio managers and analysts are my returns thereby ROC or returns on labor? obviously according to GAAP they're returns on capital but inside the mutual fund there are people laboring away. if i in-house that mutual fund along with all of that research infrastructure why does it suddenly become return on labor? it's the same economic activity.