You’re still going to lose money. If you’re lucky, all else is forgiven. And all too often, when people make money,they like to claim it’s skill. For a while, the hedge fund managers were saying this. We’re skillful guys. We’re the smartest people in the room. Says who?When people talk about smart money, I always cringe. There is no smart money.
There’s less stupid money and more stupid money. But there’s really not smart money. And in fact, the best evidence that thereis no smart money in hedge funds is what’s happened collectivelyto the hedge fund business. You know how hedge funds work, right?First, they take % of your money up front. Then they take % of whatever your upside is. It’s a horrendously bad set up. But you do it because you’re greedy. You think they can deliver more than the market. Collectively, hedge funds deliver about one percentagepoint less than what you could makeby putting your money in an S&P Index fund.
Brisbane Property Valuations a strange business. I can’t think of– the analogy would be starting a plumbingbusiness called Floods R Us. And here’s what you do. There’s a leak in your house. You call me, and I leave a flood. You would never call me back. That’s what we do collectively with these hedge funds. We pay them tons of money to do what?Earn less than what we could have made by not paying them.
You figure it out, because I certainly can’t. So here’s my final point about valuation. It’s one of my favorite movies of all the time,”The Wizard of Oz. “Remember the story?Dorothy gets sucked out of Kansas. She gets dumped in Oz. She wants to go back to Kansas. Don’t ask me why. I’d have stayed in Oz. So of course, the move starts with, I need to go back. And of course, she’s given the classic advice. Go meet the Wizard of Oz. He has all the answers.