Do Hedge Funds Even Yield Supernormal, Positive Returns?

2min Snip

00:00

Play full episode

Summary

Transcript

Episode notes

Do hedge funds even yield supernormal, positive returns on net? So it depends on the period you look at. An uncorrelated return which isn't driven by just the market going up is pretty hard to come by. And in terms of a big diversified pension fund or endiwament portfolio, will help your sharp ratio. It's giving you extra juice to your return, whilst without adding to risk because it's not a correlated position.

Venture capital powered the tech revolution, but what powers venture capital? With his in-depth knowledge and coverage of the sector you’d be forgiven for thinking Sebastian Mallaby is a veteran of the Silicon Valley scene. The author of several books on finance and economics, Sebastian takes pride in understanding his subjects intimately (perhaps too intimately, if you ask his critics). His latest book, Power Law: Venture Capital and the Making of the New Future, sheds light on the small but mighty industry.

Sebastian joined Tyler to discuss why venture capital skills aren’t more replicable, the promise of biotech despite increased regulations, why venture capital remains concentrated in the Bay area even after the pandemic, the differences in risk-taking between East and West coast finance, the secret to Mike Moritz’s success as an investor, how Peter Thiel’s understanding of the power law set him apart, why he isn’t interested in becoming a venture capitalist himself, his predictions for the European tech ecosystem over the next ten years, the original sin of “too big to fail,” the major failure of Alan Greenspan during his tenure at the Fed, the Darwinian evolution of good hedge fund strategy, what Ray Dalio got right with Bridgewater, the finance topics he feels are undercovered, what it takes to be a good Substack writer, why he’s bullish on The Information, reasons to be optimistic about the innovative and entrepreneurial trajectories of Japan, the greatest living British historians, the future of the World Bank once China stops borrowing from it, what’s causing the decline in popularity of liberal capitalism, the zany appeal of The Grand Budapest Hotel, and more.

Check out Macro Musings. Follow Macro Musings on Twitter. Subscribe to Macro Musings on your favorite podcast app.

Read a full transcript enhanced with helpful links, or watch the full video.

Recorded January 31st, 2022 Other ways to connect

Follow us on Twitter and Instagram
Follow Tyler on Twitter
Follow Sebastian on Twitter
Email us: cowenconvos@mercatus.gmu.edu
Subscribe at our newsletter page to have the latest Conversations with Tyler news sent straight to your inbox.