Very dumb question

Analyst 2 in IB - Cov

Anonymous

Funniest

you didn’t

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trying_my_best

What did you do in your role? Are you a sell-side strategist? If so, how did you help funds market time?

BigData24

Most Helpful

Some markets like ETFs and liquid options are practically efficient for all intents and purposes; you won't be able to arb them (but you can still make directional bets). Other markets like equities are arguably inefficient due to information disparities and the prevalence of qualitative factors & biases in valuation. Alpha represents a potential "arbitrage" between individual stocks and indices (not really but you can think of it like that).

In the long term it is unlikely that just stock picking can significantly outperform market indices, but even 1% is a pretty big deal as long as it's consistent. Also, hedge funds have a variety of tools to further bump up returns, such as access to more leverage and better information than the average investor. Theory tells us that markets are only efficient because someone out there is making money by setting accurate prices; this is the role of firms like hedge funds.

I read a paper that analyzed various hedge funds and concluded that in general, fund managers were able to generate a small amount of alpha, but on average, fees exceeded alpha. So whether or not hedge funds actually provide value is debatable. But as long as someone is willing to fund it, that must mean that there's some kind of investor demand that's being met, at the very least.

morgantire

RandomAnalystGuy

Market timing doesn't work. I know it doesn't work. Countless academic studies prove it doesn't work.

So how have I made a career for over a decade helping hedge funds time the market? I honestly don't understand this and never have, especially after what last year did.

You're trolling, right? First of all, *obviously* market timing helps if you can do it well. All those academic studies just say that its very very hard to get right.

But even ignoring that -- some people think markets are efficient, some people don't. Some people think hedge funds outperform, some people don't. Etc etc. But nobody thinks the advantage of hedge funds is *market timing*. Nobody picks a hedge fund to buy the exact same stocks I would have bought myself, but do it with better timing. I don't know you or your specialty, but I don't believe you "made a career for over a decade helping hedge funds time the market." At best, maybe you were helping them do other things (like asset selection).

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PrivateTechquity 🚀GME🚀

11mo

RandomAnalystGuy
Market timing doesn't work.

It absolutely does though. The people who claim it doesn't either work at a place where it doesn't matter (e.g. big LOs) or aren't smart enough to figure it out and/or are naïve enough to believe in the EMH lol

"The obedient always think of themselves as virtuous rather than cowardly" - Robert A. Wilson | "If you don't have any enemies in life you have never stood up for anything" - Winston Churchill | "It's a testament to the sheer belligerence of the profession that people would rather argue about the 'risk-adjusted returns' of using inferior tooth cleaning methods." - kellycriterion

PM in HF - Other

Anonymous

Mentor

11mo

Listen here Bernie Madoff, your time will come keep running and enjoying for now.

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Principal in PE - Growth

Anonymous

11mo

Did you "help" them by buying at the top and selling at the bottom?

Authored by: Certified Private Equity Professional - PrincipalCertified Private Equity Pro

Investment Analyst in AM - Equities

Anonymous

11mo

Your post history says you were a large cap equity analyst at a boutique IB (and founded some crypto startup). So does being a large cap equity analyst = advising hedge funds on market timing?

Authored by: Certified Asset Management Professional - Investment AnalystCertified Asset Management Pro

RandomAnalystGuy

11mo

Investment Analyst in AM - Equities
Your post history says you were a large cap equity analyst at a boutique IB (and founded some crypto startup). So does being a large cap equity analyst = advising hedge funds on market timing?

I do try to be polite on the internet, but the association with crypto is unacceptable. Learn how to fucking read. The startup was not crypto related. That's probably why I failed to get funded.

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Investment Analyst in AM - Equities

Anonymous

11mo

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