Institutional Investor’s Alpha published its rich list for 2013 this week which, as Matt Levine has described with flair and some made-up maths, is only tangentially related to how well the hedge fund managers in question performed last year:
If you start with a ton of money, and/or your hedge fund has really good returns, you will make a lot of money. Notions of fair compensation for your labor, or appropriate pay for performance, just don’t enter into it. Money begets money, lots of money begets lots of money, and skill in the begetting is a nice bonus.
That post is also his contribution to the burgeoning mountain of Piketty-related comment, and without tossing another pebble onto the pile, it is worth digging a little more into the reasons for those vast fortunes to exist, and why that matters. Read more
From an excellent writeup by Ed Yong about a study from the team of sociologist Arnout van de Rijt:
On Kickstarter, where people raise money for specific projects, [the researchers] picked 100 out of 200 projects and donated a small proportion of their funding goal. On Epinions, where users review products and are paid based on the quality of their appraisals, they gave a “very helpful” rating to some new, unrated reviews. On Wikipedia, where dedicated editors can get status awards to honour their commitment, the team gave awards to a random subset of the most productive editors. And on Change.org, where people call for signatures to support their campaigns, the team gave a dozen signatures to 100 out of 200 early-stage campaigns. Read more
Who or what does the following quote refer to?
Far too much mediocrity is rewarded for nothing other than destroying value. Read more
In “The Drunkard’s Walk”, Caltech physicist Leonard Mlodinow’s book about how people misunderstand the amount of randomness in their lives, there’s a short but fascinating passage discussing Bill Miller’s 15-year streak, beginning in 1991, of beating the S&P 500.
Mlodinow’s book is what first came to mind when we heard the news last week that Miller was stepping down from the Legg Mason Value Trust fund, which he’d managed for thirty years. In the five years since the streak ended, Miller’s fund lost 9 per cent annually and ranked dead last out of the 840 funds in its category, according to Lipper. Read more