All,
There is obviously some selection bias here. Big losers have not been inclined to post in this thread for some reason.
But also, for a relatively large group of retail investors there will be some members who perform better than the best performing hedge funds. And some that perform worse than worst performing hedge funds over a year’s period.
I would like to leave any individuals out of this. That works out well because Daniel Kahneman talks about this with schools (from Thinking Fast and Slow):
"The Gates Foundation found that “most successful schools, on average, are small. These data encouraged the Gates Foundation to make a substantial investment in the creation of small schools…”
Also according to Kahneman:
"If the statisticians who reported to the Gates Foundation had asked about the characteristics of the worst schools, they would have found that bad schools also tend to be smaller than average. The truth is that small schools are not better on average; they are simply more variable. If anything, say Wainer and Zwerling, large schools tend to produce better results, especially in higher grades where a variety of curricular options is valuable."
In case I have to actually say this: some small, volatile retail portfolios will outperform (underperform) the best (worst) hedge funds over a year’s period because they are “more variable.” That is just very basic math.
That some of the portfolios at P123 are more volatile than the Medallion Fund is not in question is it?
If you are a new member you should look at the median performance of the designer models to predict how well you are likely to do until you get some experience. Kahneman has a name for that too: The Base Case.
Best,
Jim