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.
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