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Why Hedge Funds Will Underperform the Market

In Wall Street you have this progression from the innovators to the imitators to the swarming incompetents. And what happens is that the results achieved by the innovators enable the product to be sold by a lot of people simply because the record of a few people was good. So the idea that billions--well, trillions of dollars can be managed to get above average results while charging fees that are way higher than normal just defies the logic. So, in aggregate, people are going to be disappointed with the results you get from hedge funds. But there will be ones that do terrifically, but I would not want to buy them across the board.
Tags: hedge funds