Barry Ritholtz, Ritholtz Wealth Management Chairman and CIO & “Masters in Business” host, discusses risk-reward and the less liquid aspects of the market:
“I’m reminded of the words of the great investor, Groucho Marx, who said ‘I don’t want to be a member of any club that would have me.”
When we look at alternatives and that’s everything from venture to hedge fund to private equity, the ones you can get into tend to not to be the top performing funds. If you have a billion dollars and you’re well connected, I can make a few phone calls and get you into the top decile of alts, but most investors don’t have access to that.
So you end up in a circumstance where you can’t treat the universe of alts like you can the market for stocks or bonds. You end up with a very fat head / long tail of a handful of alpha generators and then a whole lot of expensive under-performers…”
2021 Made The Market Look Easy
Source: Bloomberg, August 2nd, 2022