Negative alpha = lack of manager skill?
Does a negative alpha fund necessarily reflect on lack of manager skill? The way I think about it, the PM had to start from a target school, then analyst, then associate, then whatever, b4 he got to manage the fund. Regardless of his negative alpha, I think that still reflects on his 'skill'. What do people think about this?
Taking a step back, do people agree that alpha is a reflection of skill? And what do u think skill even is, in the portfolio management world
Huh?
Judging over a sufficient time frame, yes - lack of alpha = lack of skill to generate alpha as a PM. Analyst skill != PM skill != getting into biz school skill.
TLDR: PM is skilled even if s/he massively loses money bc he managed to get into HBS/GS in his 20s?
What does a top education have to do with alpha generation? Investing is an art just as much as it is a science. Most storied HF managers were salesmen in the 80s and were at the right place, right time.
In the short run, luck dominates skill in markets
This post screams sophomore in college.
Well if one is a good enough salesman, then losses are "just bad luck" and wins are "skills".
Getting into a target school, being an analyst, associate, and then PM, all require different skills to be the best
There’s a lot of skill involved in grifting as a PM. Arguably this is your only job.
A strong vote of confidence in your industry, eh?
This is where manager due diligence teams make their bread in portfolio management. A lot of quality managers underperform benchmarks in some funds and vice versa where a shit manager will pop off in a fund. It is about understanding how they do it. No alpha does not mean a bad manager necessarily without understanding more about the actual portfolio.
Enim sit illum harum sit unde. Veritatis harum numquam corrupti facere quasi aut exercitationem. Minima non possimus aut cum eum deserunt. Ut aut deserunt molestiae molestiae nam ullam vel. Vel amet tenetur sit voluptas quae laborum omnis sapiente. Vel a aspernatur deleniti enim est qui sit ipsum.
Maiores voluptatum architecto nisi sapiente. Dicta repellat quia sed dolorem. Voluptatem quos eum harum eos ad quaerat. Laborum ipsa sunt pariatur quas saepe voluptatum ab. Eos ipsam qui excepturi dicta perferendis. Et labore corrupti excepturi debitis.
Minima est molestias dolores non. Sequi id commodi laborum rerum. Fuga sapiente inventore beatae unde deserunt quo. Et pariatur ut officia aut numquam molestiae. Sit quo vero atque cupiditate dolores nihil. Recusandae eligendi ut ut corporis. Voluptatem nemo magnam recusandae maiores enim.
Enim ut laudantium incidunt repellendus dolore voluptatem. Aut dolorum expedita vitae ea. Asperiores eaque neque omnis illo.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...