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I would be curious to see how much the top selling guy outperformed the market over his career.

 Kilkrazy wrote:
Is RBS a bank?

Rrrrrroyal Bank of Scotland.

 hotsauceman1 wrote:
What is a hedge fund Manager?

The classic example is the two and twenty. Basically, the hedge fund contacts you, a person with a lot of money*, and woos you in to investing with it. They promise you a return well above market averages, and they'll print all kinds of graphs to prove to you they can deliver it. And then you sign up, they add your money to giant pile of money they've got from other rich people, and charge you 2% of your money and 20% of the profits to manage it for you. And in most cases they either fail to make you that really high return, or do it only by taking on really high levels of risk that they conceal from their clients.




*and I don't mean a person who's worked hard and saved and has a nice nest egg for retirement, I mean serious money, ten million is a small client kind of money.


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 gorgon wrote:
But regarding compensation, I struggle to criticize the idea of rewarding a manager who's outperforming. The money gets obscene in the hedge fund world, but then those managers are also getting handed obscenely large chunks of money to manage. As long as their compensation is set up fairly (i.e. the good managers are being rewarded, the bad ones aren't), it's capitalism at its finest -- outperform your peers and make people a shedload of money, and you'll make a shedload of money yourself. Again, the size of the compensation may be distasteful, but that's tied to the scale at which they're operating.

Charging two and twenty to deliver standard market returns (or above market returns with loads of hidden risk) isn't really what I'd call capitalism at its finest.


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 gorgon wrote:
Hedge funds can't really "cheat the general public" like banks though, because they're the opposite of public. They're private investment vehicles. The ultraexclusivity is half the appeal.

SAC Capital Advisors just paid out 1.2 billion for insider trading, and the only thing that makes them noteworthy is that they were unlucky enough to get caught.

And insider trading is what you're reduced to when you're just a small fish. Get some serious money in your fund and market manipulation is safer and more profitable. Goldman Sachs isn't a hedge fund, but their recent scam in aluminium is the kind of thing hedge funds run pretty regularly. They just don't get caught, because, as you say, their ultra-exclusivity is the appeal, as it makes it much harder to figure out what these hedge funds are up to.

Also, I'm willing to bet that even that top 25 is very top-heavy...that the 20th-ranked manager is probably making a small fraction of $5 billion, even if that number is still just craziness to you and me.

The average was about a billion. Which means if we figure three other guys made about 3 billion, that still leaves 6 billion to split among the other 16 hedge managers, leaving an average return of 375 million. Which is still obscene.


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 Frazzled wrote:
Here's some fun. Trying existing for a week without a bank. Nothing says "Dark Ages" like a world without banks and credit. We ownz youz buahahahahahah

Finance in general is extremely important. Lending for home and business is an essential part of the economy, and of people's lives. But is finance three times as important as it was 40 years ago? Because as a % of the economy, that's how much finance has grown in that time.

Or have we just built a weird new economic sector, that spends a fortune moving money around and not actually doing anything useful beyond what it was already delivering 40 years ago?


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 easysauce wrote:
trust me...

once you hit the point where literally, you cannto spend all the money you have no matter what crazy thing you think of, it doesnt get worse... its gets awesome

Except, as much fun as that stuff you mentioned would be, you don't actually see the stupidly rich do any of it.

Outside of supercars and the odd $1,000 dinner, the only stupidly overpriced stuff you see these people spend money is on appreciating assets - housing, tropical islands, art etc... They don't actually go about splashing that money everywhere. Instead they just accumulate.


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coinbiter wrote:
While the money they earn is crazy I'd be interested to know the proper average for the hedge managers (or the median) as for the one they quoted they took the average of 25 people and I would assume the US has more than 25 hedge fund managers in it. I'm sure it will still be very near if not at the top of the scale but I'd be interested to see what it looks like once the anomalies are taken out.

5 billion isn't an anomoly. It's an entire economic sector. The money that one hedge fund manager got, it's about half of the size of the entire video game industry, and more than half of the entire movie industry. For managing other people's money for one year, that's more than the entire payroll at McDonald's.

 sebster wrote:
The classic example is the two and twenty. Basically, the hedge fund contacts you, a person with a lot of money*, and woos you in to investing with it. They promise you a return well above market averages, and they'll print all kinds of graphs to prove to you they can deliver it. And then you sign up, they add your money to giant pile of money they've got from other rich people, and charge you 2% of your money and 20% of the profits to manage it for you. And in most cases they either fail to make you that really high return, or do it only by taking on really high levels of risk that they conceal from their clients.

Hmm. Why are they still around?

 Manchu wrote:

 Kilkrazy wrote:
Is RBS a bank?

Rrrrrroyal Bank of Scotland.

You haven't lived until you've heard that with a Texas accent.
(Looks out window and shakes fist at their office) SCCCCCCCCCCCCCOOOOOOOOOOOOOOTTTTTTTTTLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLANNNNNNNNNNNNNNNNNNNNDDDDDDDDDDDD!!!!

I'm surprised that none of the people on this kind of money have considered bankrolling biological immortality research, nuclear fusion or space travel.

If I was bringing in that kind of money, those three would be the things I'd be spending on, in that order.

Instead, they tend to do idiotic things with it like building their own skyscrapers or artificial islands or donating to political parties.

 Seaward wrote:

 sebster wrote:
The classic example is the two and twenty. Basically, the hedge fund contacts you, a person with a lot of money*, and woos you in to investing with it. They promise you a return well above market averages, and they'll print all kinds of graphs to prove to you they can deliver it. And then you sign up, they add your money to giant pile of money they've got from other rich people, and charge you 2% of your money and 20% of the profits to manage it for you. And in most cases they either fail to make you that really high return, or do it only by taking on really high levels of risk that they conceal from their clients.

Hmm. Why are they still around?

Because their clients -- who are often the opposite of novice investors -- feel they're worth it.

Wow... the wealth envy and class warfare is fairly oozing out of some pores here.

Why all the hate for hedge fund managers, when your own governments are robbing you blind in scales that businesses envy?

 Major Malfunction wrote:
Wow... the wealth envy and class warfare is fairly oozing out of some pores here.

Why all the hate for hedge fund managers, when your own governments are robbing you blind in scales that businesses envy?

I think the top Hedge Fund managers made more than many countries GDP for a year.

 Easy E wrote:

 Major Malfunction wrote:
Wow... the wealth envy and class warfare is fairly oozing out of some pores here.

Why all the hate for hedge fund managers, when your own governments are robbing you blind in scales that businesses envy?

I think the top Hedge Fund managers made more than many countries GDP for a year.

And the government gives us stuff like roads, bridges, police, fire-fighters, the military, a basis for out currency, consumer protection, ect.

 Co'tor Shas wrote:

 Easy E wrote:

 Major Malfunction wrote:
Wow... the wealth envy and class warfare is fairly oozing out of some pores here.

Why all the hate for hedge fund managers, when your own governments are robbing you blind in scales that businesses envy?

I think the top Hedge Fund managers made more than many countries GDP for a year.

And the government gives us stuff like roads, bridges, police, fire-fighters, the military, a basis for out currency, consumer protection, ect.

If you don't pay a hedge manager thats fine. If you don't pay the government they come with guns, take your stuff, and put you in jail.

I seem to be picking on you Fraz!

You've used government services though, so you gotta pay for them.

If you used a hedge fund manager's services and didn't pay up, I'm sure they'd take measures to get their money, too.

 Da Boss wrote:
I seem to be picking on you Fraz!

You've used government services though, so you gotta pay for them.

Not really actually. Roads yes, but I pay for those in road and gas taxes. Defense, sort of but having lost a grandfather, having another get his eye blown out, and having an uncle go insane - I think we're good on that front no?

What else?

 Frazzled wrote:

Not really actually. Roads yes, but I pay for those in road and gas taxes. Defense, sort of but having lost a grandfather, having another get his eye blown out, and having an uncle go insane - I think we're good on that front no?

What else?

I say this knowing you're old: The Internet.

That started as a defense item. Again, I think my family has paid its dues in that regard.

 gorgon wrote:
Because their clients -- who are often the opposite of novice investors -- feel they're worth it.

But they must be novice investors, if they're frequently failing to beat the market as sebster told us they do.

Experienced investors would bolt from such schemes if they weren't getting returns in line with their expectations.

 Seaward wrote:
Hmm. Why are they still around?

Why are there fad diets? Why are there motivational speakers?

Because your effectiveness is only one part of why you are able to sell your services. And sometimes it is a very small part.


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 Major Malfunction wrote:
Wow... the wealth envy and class warfare is fairly oozing out of some pores here.

It's really boring and more than a bit lazy to assume that 'that guy earnt 5 billion and that's more than the entire payroll for McDonalds, CEO and all' is wealth envy.

Instead, understand that what we're looking at is a major market distortion, that a small number of individuals can extract vast fortunes of money from the system without being able to point to any real overall economic benefit to society.

For instance, it's often been suggested that arbitrage schemes provide a valuable service by facilitating accurate pricing. But when it reaches the point that hedge funds have multi-billion dollar investment funds controlled by complex programs on supercomputers so that they can extract arbitrage hundreds of a second before other hedge funds with their own supercomputers... well no-one is going to pretend that pricing corrections within a fraction of a second represent a gain to society.


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 Seaward wrote:
Experienced investors would bolt from such schemes if they weren't getting returns in line with their expectations.

Yeah, people are perfectly rational and immediately identify when a service isn't worth the price charged. That's why everyone gave up on atrology centuries ago.

Ultimately, if you take all the money invested in hedge funds, and put that instead in to treasury bills, the investors would have been twice as well off. That's... a woeful result. And why is fairly simple - hedge funds hide risk and manipulate reporting of their performance, oversell and then take their 2 and 20, reaping their own return when the generally high risk strategies pay off, and leaving the investor to wear the loss by themselves when it goes bad.

 sebster wrote:
Yeah, people are perfectly rational and immediately identify when a service isn't worth the price charged. That's why everyone gave up on atrology centuries ago.

Ultimately, if you take all the money invested in hedge funds, and put that instead in to treasury bills, the investors would have been twice as well off. That's... a woeful result. And why is fairly simple - hedge funds hide risk and manipulate reporting of their performance, oversell and then take their 2 and 20, reaping their own return when the generally high risk strategies pay off, and leaving the investor to wear the loss by themselves when it goes bad.

I worked in marketing for a company that focused on managed accounts, which are decidedly downscale from hedge funds but definitely upscale from mutual funds. Our list of clients included people you'd recognize -- athletes, celebs, etc. So I know all about the marketing and narratives aimed at the upper crust and their financial advisors. And obviously we have recent examples of smart investors being fooled.

However, with hedge funds you're mostly talking about large institutional investors -- not novices, not people easily bamboozled or swayed by emotion, and not people comfortable with excessive risk. They're usually tough cookies who do their due diligence. And these institutional investors have been investing in hedge funds for decades. And you've apparently figured out that they're all in error? That they're akin to a bunch of old women obsessed with astrology?

Do you honestly think that you understand these hedge funds better than those guys -- that you have a level of chops for dissecting this stuff that they haven't reached? Would you be willing to consider that their investments in hedge funds represents a *much greater* understanding than yours about the benefits those funds bring to the portfolios they manage?

Look, I'm not exactly the most fiscally conservative voice on the board. And there are plenty of valid criticisms of the financial services industry. But man, I think you're vastly overreaching here.

My advice/viewpoint from my years in financial services -- it's easy to demonize the banks, investment companies, etc. Sure, it's compelling, if lazy, to imagine a bunch of Lex Luthors manipulating everything and everyone. They do bad things sometimes. But IMO more harm is done to regular folks from two sources -- the failure of the 401K experiment, and some financial advisors who don't put their clients' interests first.

 gorgon wrote:
However, with hedge funds you're mostly talking about large institutional investors -- not novices, not people easily bamboozled or swayed by emotion, and not people comfortable with excessive risk. They're usually tough cookies who do their due diligence. And these institutional investors have been investing in hedge funds for decades. And you've apparently figured out that they're all in error? That they're akin to a bunch of old women obsessed with astrology?

Do you honestly think that you understand these hedge funds better than those guys -- that you have a level of chops for dissecting this stuff that they haven't reached? Would you be willing to consider that their investments in hedge funds represents a *much greater* understanding than yours about the benefits those funds bring to the portfolios they manage?

The numbers are what they are. Hedge funds have a really poor rate of return for their investors, especially the large institutional funds. Now, obviously it isn't as ridiculous as astrology, I merely mentioned that as a counter to the argument that if it exists, then we must conclude that it is delivering a good service no matter what the evidence tells us.

My advice/viewpoint from my years in financial services -- it's easy to demonize the banks, investment companies, etc. Sure, it's compelling, if lazy, to imagine a bunch of Lex Luthors manipulating everything and everyone.

I am absolutely not in any way opposed to financial services. It's an important job and a key sector in any modern economy.

I'm simply opposed to people who recklessly over promise, and charge excessive fees based on that promise. And when the return they can deliver basically amounts to more or less the same as any other investment strategy, long term adjusted for risk... then taking $5 billion in a single year to deliver it is incredible.


Oh, and the 401(k) doesn't have anything fundamentally wrong with it, apart from too many people paying too much money to managers who pretend to be able to generate above market returns. Same as the problem above. The structure itself, tax benefits for people who build a nest egg for their own retirement is very sound.

 sebster wrote:
The numbers are what they are.

You keep mentioning those numbers. Could you show us some? A cursory glance around the web directly contradicts the following claim:

Hedge funds have a really poor rate of return for their investors, especially the large institutional funds.

The studies I've looked at show hedge funds outperforming the market and offering considerable returns even when the market's down.

I am absolutely not in any way opposed to financial services. It's an important job and a key sector in any modern economy.

I'm simply opposed to people who recklessly over promise, and charge excessive fees based on that promise. And when the return they can deliver basically amounts to more or less the same as any other investment strategy, long term adjusted for risk... then taking $5 billion in a single year to deliver it is incredible.

Why do you care how other people invest their money or what the institutions they invest with pay their employees?

 Seaward wrote:
You keep mentioning those numbers. Could you show us some? A cursory glance around the web directly contradicts the following claim:

As I already stated, the return on all hedge funds over the life of all those funds, to the investor, is worse than if they'd put their money in to treasury bills. If you haven't read any commentary about that in the last couple of years, it could only be because you don't read financial journalism (and if that's true, well I don't blame you, with a few notable exceptions it's a pretty crappy place to learn anything).

Anyhow, it probably started with The Hedge Fund Mirage. That's a book from an insider, who put billions in to hedge funds while working at an investment bank. His analysis pointed out the above fact - that in terms of what the investor got back they would have been better off with all their money in t-bills, that all the return made by hedge funds was wiped out and then some in 2008 (and that's before their 2 & 20 cut). Since then there's been a reasonable flow of articles pointing out the massive problem with the hedge fund industry, all around one key issue - that arbitrage schemes that generate good returns on a $150 billion asset base (such as we saw through the 90s when hedge funds performed very well) stop working when there's 2.5 trillion in the market.

That book is a guess on exactly where it started, I haven't read the literature in such detail to pinpoint when people started noticing that hedge funds did not produce decent returns, or how much of a role Lack's book played, but the overall narrative is pretty clear.

The studies I've looked at show hedge funds outperforming the market and offering considerable returns even when the market's down.

Yeah, that's the kind of spam the hedge fund industry throws out every year. The firms in the industry are, of course, trying to sell you something. It should be taken as seriously as the claim that McDonald's uses all natural ingredients.

Anyhow, the first part is based on a trick, it just lists a dollar invested in, say, 1995, and reports as if that dollar generated average hedge fund industry returns each year until today. But it doesn't weight for the massive inflow of new dollars in. Think of it this way, if you earned 10% every year from 1990 until 2008, when in 2008 you lost 30%, well on a chart showing average return you'd still look pretty good. But once you account for the fact that those hedge funds controlled 150 million odd in assets when they were making 10% returns, growing up to 2.5 trillion in assets when they made that 30% loss, then you understand how the hedge funds managed to wipe all the profit they ever booked, and then some, in 2008.

The second claim is based just on the market losing more than hedge funds in 2008. Hedge funds, despite the name, are really hedged and in fact are often heavily leveraged in their investments, which means that while they didn't take as big of a hit in 2008 there's nothing saying the next market drop won't hit them far more heavily than it might hit stock markets. And then there's the issue that since 2008 the market has rebounded and recovered that loss, while hedge funds have booked much, much poorer returns. Last year the hedge funds booked an 8% return - solid return but in the context of year when world stock markets grew in excess of 20% overall, it's a chronic underperformance. And last year was the best year for the hedge funds since 2008 - the overall growth in asset value in the market since 2008 has doubled the hedge funds.

Why do you care how other people invest their money or what the institutions they invest with pay their employees?

What? Do you ask that question when someone says that the Red Sox paid too much for their new catcher? People can be engaged by the game and the way it works, without actually being very interested at all in the personal lives of the players. Understanding that, you should be able to understand how the vast sums collected by the managers of hedge funds, despite mediocre returns, represent an major market imperfection that is well and truly worth commenting on.

 sebster wrote:
As I already stated, the return on all hedge funds over the life of all those funds, to the investor, is worse than if they'd put their money in to treasury bills.

And all I'm asking for is links to a few of the plethora of sources you claim to have on this.

Yeah, that's the kind of spam the hedge fund industry throws out every year.

Actually, I based it off of a book the Economist's publishing arm put out.

What? Do you ask that question when someone says that the Red Sox paid too much for their new catcher?

Absolutely. Have I ever struck you as the sort of person that whines someone else is being paid too much?

 sebster wrote:
Oh, and the 401(k) doesn't have anything fundamentally wrong with it, apart from too many people paying too much money to managers who pretend to be able to generate above market returns. Same as the problem above. The structure itself, tax benefits for people who build a nest egg for their own retirement is very sound.

I don't think the underlined has anything to do with it. Advertising regarding investments (in the U.S. at least) is highly regulated, with a ton of it being around how you communicate and talk about performance. Individual fund managers don't really get to say gak. Financial advisors can be naughty as I alluded to, but 401(k)s are a different thing. Hedge fund managers get around a lot of this stuff because they're private investment vehicles and largely unregulated.

The problem with the shift from defined benefit to defined contribution plans IMO (although I'm hardly the only one who says this) is that the small investor tends to manage their investments very poorly. With defined benefit plans like pensions, people have a professional money manager handling their retirement savings for them. The 1-hour class, marketing materials, and slap on the back many companies give their new enrollees -- especially in those plans that require employees to make their own fund selections -- is like passing out sharp objects to toddlers.

I say that not out of arrogance, but experience. I'm a reasonably intelligent fellow with an advanced degree, but it was only after working in financial services -- including getting licensed, etc. -- that I realized what a dolt I'd been regarding my entire approach, and how much money it was costing me. There is NO doubt in my mind that 401(k) participants would do far better with a money manager handling their fund selection and asset allocations. But this gak was cooked up and became popular during an incredible 20-year bull market for equities that had people thinking that investing was "easy."

 Seaward wrote:
And all I'm asking for is links to a few of the plethora of sources you claim to have on this.

And did you look in to the source I gave? No, didn't try? Not at all?

Huh. How about that.

Actually, I based it off of a book the Economist's publishing arm put out.

With a name...

Absolutely. Have I ever struck you as the sort of person that whines someone else is being paid too much?

No, I don't. Good job on ignoring my statement, and just repeating your inane attempt to dismiss the argument by having a go at me. Good job, solid seaward form there.


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 gorgon wrote:
Hedge fund managers get around a lot of this stuff because they're private investment vehicles and largely unregulated.

A structure with enormous advantages, if the market exists for them to take advantage of it. Given the performance of hedge funds over two decades... it leaves a fairly strong example that the opportunities are not as strong as claimed, certainly not enough generate profits for the 2.5 trillion currently sitting in hedge funds, over and above the 2 and 20 taken by managers.

The problem with the shift from defined benefit to defined contribution plans IMO (although I'm hardly the only one who says this) is that the small investor tends to manage their investments very poorly. With defined benefit plans like pensions, people have a professional money manager handling their retirement savings for them. The 1-hour class, marketing materials, and slap on the back many companies give their new enrollees -- especially in those plans that require employees to make their own fund selections -- is like passing out sharp objects to toddlers.

Given the historic instances of defined funds falling way behind on expected performance and needing the company to pump in more funds to catch up, I'd say the advantage of defined benefit funds is that the employer's wallet is always there as a last port of call when the fund underperforms.

Which is great for the employee and terrible for the employer, and neutral to the management of the investment. Which is no wonder employers have moved away from them en masse.

I say that not out of arrogance, but experience. I'm a reasonably intelligent fellow with an advanced degree, but it was only after working in financial services -- including getting licensed, etc. -- that I realized what a dolt I'd been regarding my entire approach, and how much money it was costing me. There is NO doubt in my mind that 401(k) participants would do far better with a money manager handling their fund selection and asset allocations. But this gak was cooked up and became popular during an incredible 20-year bull market for equities that had people thinking that investing was "easy."

Hey, don't get me wrong, good financial advice that sets a fund as effectively diversified, tax effective and all that is invaluable. My point is that people who go chasing performance and over trade squander money, and that's true whether its an individual trading on his own behalf or a fund manager.

What's needed for 401(k) is not a revision or abandonment or the structure, but just a change in people's understanding, and an increase in access to low fee index funds, to facilitate and encourage long term growth investment.

 Fafnir wrote:
One thing I've never understood is how people can even appreciate their money at that point. Once you've accrued more wealth than you can possibly hope to spend in your lifetime (and more than your children, or their children's children, can hope to do the same), let alone live comfortably, it just exists as an abstract, almost incomprehensible number.

This is why

They don't have to actually make you money, they just have to try. Either way they will be rich for their efforts.

 Rotary wrote:
They don't have to actually make you money, they just have to try. Either way they will be rich for their efforts.

I wish programmers could do the same.

 Frazzled wrote:

But we stillz ownzz da Worldzzz!

The Rothschilds would like a word with you. Not that matters, as when the mole men rise nothing will be the same.

 Frazzled wrote:

If you don't pay a hedge manager thats fine. If you don't pay the government they come with guns, take your stuff, and put you in jail.

That depends on what sort of debt you incur. Tax evasion will get you sent to jail, defaulting on student loans will not.


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 Fafnir wrote:
One thing I've never understood is how people can even appreciate their money at that point. Once you've accrued more wealth than you can possibly hope to spend in your lifetime (and more than your children, or their children's children, can hope to do the same), let alone live comfortably, it just exists as an abstract, almost incomprehensible number.

See, you say that, but when you think "Sweden looks like a really cool place!" and you realize you have the money to book a ticket for tomorrow you realize that having enough money to tend to any whim is pretty awesome.

 sebster wrote:
And did you look in to the source I gave? No, didn't try? Not at all?

Huh. How about that.

Did I go buy the book you referenced? No. Chances are pretty good it doesn't actually say what you think it says, anyway, if past conversations are a guide. I don't quite care about this discussion enough to go track down an obscure, hardcopy reference. If you're having that much trouble backing up your argument with sources available on the internet, then perhaps there simply isn't evidence for it?

I'm going to continue to assume that savvy professional investors who continue to pour money into hedge funds know a little bit more about it.

No, I don't. Good job on ignoring my statement, and just repeating your inane attempt to dismiss the argument by having a go at me. Good job, solid seaward form there.

Don't get so angry. I didn't ignore your statement. You asked if I'd say the same thing to someone whining about how much a professional athlete gets paid, and I said I would.

 Seaward wrote:
Did I go buy the book you referenced? No. Chances are pretty good it doesn't actually say what you think it says, anyway, if past conversations are a guide.

So you ask for sources, and when presented you find an excuse to not even look the book up. Not read a review or a summary, because that would require learning.

I don't quite care about this discussion enough to go track down an obscure, hardcopy reference. If you're having that much trouble backing up your argument with sources available on the internet, then perhaps there simply isn't evidence for it?

I don't know why I'm doing this, but here you go.

http://www.reuters.com/article/2013/11/22/us-reuters-summit-hedgefundinvestors-ana-idUSBRE9AL14020131122
"Investors, money managers and consultants who spoke with Reuters said very few hedge funds still produce the type of returns that justify their hefty management and performance fees, typically 2 percent and 20 percent, respectively."
"That may be why record inflows persist despite average returns of about 7.7 percent through October, trailing the Standard & Poor's 500's 19 percent rise at that point. It's the third year in a row that the industry has failed to keep pace with the U.S. stock market."

http://www.reuters.com/article/2013/12/23/us-hedge-funds-idUSBRE9BM00620131223
"For everyone else 2013 proved another tough year as big-name funds as varied as global macro, commodity and computer-driven funds struggled to make money, eating further into the track record of these one-time 'masters of the universe.'"
"More worrying is that longer-term performance over key three- and five-year periods is also looking poor. Hedge funds have made returns for their investors of 9.4 percent since 2011, and 39.6 percent since 2009, data from Hedge Fund Research shows, but an investment in a fund tracking global stocks would have made around 32 percent and 75 percent respectively."
"Despite the relatively poor performance, investors continue to put more money into hedge funds."

http://www.bloomberg.com/news/2013-12-09/the-five-reasons-hedge-funds-underperform.html
"The numbers cited above are eye-popping: The average hedge fund is underperforming the S&P 500 by more than 2000 basis points this year alone. That is an astonishingly poor showing. As Saijel Kishan & Kelly Bit point out in the Bloomberg News article, hedge funds have “underperformed the S&P 500 by 97 percentage points since the end of 2008.” The last time the fund industry outperformed U.S. stocks was in 2008."

I'm going to continue to assume that savvy professional investors who continue to pour money into hedge funds know a little bit more about it.

Ignoring me is good advice, because I am just some guy on the internet. But your argument that investors (who you presume to be savvy and professional, possibly because of the nice suits they wear) must know what they're doing... good god damn. That is basically sucker's game #1, the absolutest fastest way to lose lots of money. I really hope your wife handles your money.

Don't get so angry. I didn't ignore your statement. You asked if I'd say the same thing to someone whining about how much a professional athlete gets paid, and I said I would.

Not angry - bored and dismissive. Because we've done this so many times before. I'll post something you don't like the sound of, and then we'll start going back and forth, I'll give an argument, maybe with a link or something paraphrased from somewhere, and in reply you think up ways to ignore that, making asking for a source (which when provided you ignore). And you do this without ever coming up with an argument of your own.

About the only time I've ever seen you volunteer information and attempt constructive debate was on fighter planes, and it's like you're a totally different person. But let's use that as an example here, let's say you're trying to say that some new weapons system costs too much money, and someone responds with "what do you care what the CEO and shareholders at Lockheed Martin earn?" Do you get how that is nonsense?