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I don’t think it’s at all clear that PE and hedge fund returns aren’t highly correlated with public market performance. 7% a year returns on a truly consistent basis isn’t what is promised or guaranteed, and hedge fund returns were often very poor for the decade from 2008.
Oh come on. You’re not wrong, but it’s so very rare. There are a few hundred, maybe couple thousand young people who have made that kind of money in the business in the *entire world, certainly in the West. The overwhelming number of people in every aspect of high paying front office finance work regular length careers and, even if affluent, don’t really attain PMC level fuck you money until middle age at the earliest. As far as ‘ten figures’ go, 35 year old billionaires who made it in finance are so rare that they don’t even count as a plausible outcome for any substantial number of really smart analysts.
2 points. First, Private Equity and alternative investments outperform their public counterparts. How do I know this? I worked at a pension fund. Everyone is aping into the private markets for the same reasons.
Second, many individuals consistently beat the market. The thing is, these people trade their own capital. Or at the most of some insiders/partners.
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Yep, ZIRP fucked up a lot of active management. Things are already starting to swing back the other way. Also, a lot of new entrants to the PE world were indeed awful investment but, because of a lot of the scrutiny on publicly traded products post 2008, it was easier to raise as a PE fund then a public bank or asset manager. Regulation distorts the market. The funny (or sad) thing is that the WSJ is now routinely publishing articles about how Blackstone et al are effectively shadow banks because of the regime change after the Global Financial Crisis.
Well, yeah. I was talking about the outliers on purpose. Beyond that, the dirty-dirty-dirty secret of finance is that it's a shitty career treadmill job rife with keeping up with the Joneses thinking that turns your top line $1mm compensation into effectively middle class in NYC. For a hoot, look up the flash in the plan popularity of Search Funds. A bunch of finance bro's decided it would be better to run some retiring Boomer's HVAC business in Milwaukee instead of grinding it out at Goldman. Turns out, boomers don't want to sell their money printing machines.
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