He is 100% right, not only in regards to the hedge fund industry, but the money management industry as a whole. The mantra at 99.9% of investment banks is to hit production quotas via commissions generated, else you’re out. Period, end of story. Having been audited numerous times, it was never a topic whether or not my investment decisions were helping clients or not. All they were interested in where legal risks and/or whether or not I was a worthwhile profit center.
The industry needs to be overhauled. In my estimation, the best way to do with is to empower people to self-direct their investments and to put hedge fund managers and advisors into coal mines, in order to help America become great again.
The stock brokers can help build the wall on the Mexican border, which will be paid for by the Mexican government.
Buffet on hedgies:
If you enjoy the content at iBankCoin, please follow us on Twitter“There’s been far, far, far more money made by people in Wall Street through salesmanship abilities than through investment abilities,” Buffett said Saturday during Berkshire’s annual meeting in Omaha, Nebraska.
Hedge funds traditionally charge a management fee that’s 2 percent of assets, plus 20 percent on any profits. That’s “a compensation scheme that is unbelievable to me,” Buffett said. He added that some pension funds have disregarded his advice, and gone ahead and hired consultants.
“I hope you realize that for the population as a whole, American business has done wonderfully, and the net result of hiring professional management is a huge minus,” Buffett said.
“Supposedly sophisticated people, generally richer people, hire consultants. And no consultant in the world is going to tell you, ‘Just buy an S&P index fund and sit for the next 50 years,’” Buffett said. “You don’t get to be a consultant that way, and you certainly don’t get an annual fee that way.”
Reminds me of this Planet Money podcast where Buffet bet that the Vanguard index fund could beat any hedge fund over the long term.
http://www.npr.org/sections/money/2016/03/04/469247400/episode-688-brilliant-vs-boring
Yes, Uncle Warren is right.
Uncle Warren is fucking Satan. Wake up frog.
So, is uncle Warren buying hedge fund(s)?
Warren the devious fiend goes back to sounding like the friendly iced-cream cone eating grandfather… I’d like to put Mr. Buffett on the wall, as well.
What makes you think Buffett is a devious fiend? What did he do that was devious?
deathbed deals with soon to be widows maybe?
frog – http://www.zerohedge.com/news/2015-11-13/buffet-backlash-anger-builds-hypocrite-billionaire-hiding-behind-folksy-facade
A few thoughts:
Salesmen are the core of money management and it’s bullshit but people are dumb so they listen to good salesmen not those well versed in markets.
Index funds are all and good but laymen underestimate the risk of the major indicies. A good financial professional will inform the investor of diverse ways to invest in products suitable to risk.
I am currently a financial planner but would be willing to “build it” for $25 an hour.
I’m curious, as my father recently handed me stuff to look at…. It takes all of a couple minutes to plug in the data to generate these plans, no? I ask this as a former public accountant making bank on the basic client.
A lot of times comprehensive planning is more about being available to change with changes in the client. Yes each analysis is not overly difficult but people are more paying for the peace of mind. My business is equal parts insurance and investments. Probably a little different than what the Fly does.
Working on the weekend?
I did not watch Buffett’s video, but here’s what I think is his basic point: Over time the larger fees and commissions of “hedge funds” have a significant impact on return.
I ran a Monte Carlo simulation of trading scenarios. It’s eye-opening how a minuscule percentage change in parameters can make the difference between profit or loss, and eventually bankruptcy or success.
Look how well the casino edge works for the casino. Compare its size to that of trading fees and commissions.
@helicopter ben. Thank you for splaining yourself. You will do well. But I don’t buy it.
lol
There are many people who need financial direction above and beyond investments, that’s where an advisor earns his money.
In other news. Larry Wilmore gave a cool presentation. At the Prez Press thing tonight. Disagree or whatever. It was alright. It was basically true enough. Spooky how Trump gets people to really speak the mind. Irony on the scale of epic. .