THE BIG INVESTMENT LIE
EXCERPTS
The aura versus the facts:
Sauntering through the expensive, glossy outputs of the professional investment field you
may glimpse arcane, sophisticated-sounding articles, suggesting the discourses of an elite
corps of exquisitely-knowledgeable experts. … Yet in spite of the self-serving message
trumpeted both to insiders and outsiders by these arcana—“we insiders are smart and
extraordinarily capable”—the actual fact is that professional investors do not do better than
the random investment picks of a gaggle of monkeys.
An exceptionally successful fee-collecting industry
The success of nearly all prosperous investment professionals consists not in procuring
higher rates of return on investment for their clients, but in procuring astoundingly high
fees from their clients—without the clients taking much notice.
On hedge funds:
I have found that many people are astonished, incredulous, and downright indignant to be
told that hedge funds are a worse investment than a market index fund, or virtually any
common run-of-the-mill mutual fund with low fees. They are indignant because so many
seemingly respectable people they know—not to mention the hedge fund managers
themselves, who are respected only because they have grown incredibly rich—believe that
hedge funds are superior investments. This is an archetypal instance of The Big
Investment Lie in action. People believe it because so many “respectable” people say it is
so.
by Michael Edesess
