Thanks a lot for sharing, Joachim ! It'd be interesting to find out to which extent these findings can be transposed into the analysis of PE/VC portfolios, where hyper-connectedness & hoarding are also known phenomena...
Hard to say, but there is definitely a lot of herding in the VC space and my guess is that GPs that stray from the heard and invest in unfashionable sectors will get better returns.
Agreed. In my view your post and the study can also explain why thesis-driven, focused (& smaller ...) funds can outperform larger, generalist entities over the long run.
Useful article. Retail Fund managers can “herd” too: many tend to buy the same stocks regardless of their purported investment style; and some hold 100 stocks which is just a closet tracker.
Now - How do I find a “peripheral” fund manager ……. [Nick Train? Terry Smith?].
The reason "The Big Short" was so popular was its view that one has to be eccentric, outrageous, annoyingly (endearingly?) anti-social, or even autistic to make outrageously successful macro bets or short sales to zero. This is a well-worn dramatic trope https://en.wikipedia.org/wiki/Hero%27s_journey ... "Moneyball" is similar. But then everyone goes home from the movie theatre and puts their retirement money in index trackers ;-)
I love that. It's right up there with Mawer's "Be boring, make money" slogan.
Thanks a lot for sharing, Joachim ! It'd be interesting to find out to which extent these findings can be transposed into the analysis of PE/VC portfolios, where hyper-connectedness & hoarding are also known phenomena...
Hard to say, but there is definitely a lot of herding in the VC space and my guess is that GPs that stray from the heard and invest in unfashionable sectors will get better returns.
Agreed. In my view your post and the study can also explain why thesis-driven, focused (& smaller ...) funds can outperform larger, generalist entities over the long run.
Useful article. Retail Fund managers can “herd” too: many tend to buy the same stocks regardless of their purported investment style; and some hold 100 stocks which is just a closet tracker.
Now - How do I find a “peripheral” fund manager ……. [Nick Train? Terry Smith?].
The reason "The Big Short" was so popular was its view that one has to be eccentric, outrageous, annoyingly (endearingly?) anti-social, or even autistic to make outrageously successful macro bets or short sales to zero. This is a well-worn dramatic trope https://en.wikipedia.org/wiki/Hero%27s_journey ... "Moneyball" is similar. But then everyone goes home from the movie theatre and puts their retirement money in index trackers ;-)