Qualitative Over Quantitative

Hedge funds are considered some of the most sophisticated financial institutions in the world, employing math PhDs, physicists, and software engineers to place stock trades using the best quantitative analysis that money can buy…

So why is it that over the course of any given decade, almost every single major hedge fund underperforms the S&P 500?

It’s because the ability to accurately forecast future trends AND pick the companies that will pioneer those industries requires something that can’t be quantified: Instinct and vision.

It’s because the best investors operate over longer time horizons and develop their own intuition through experience, trial & error, and study.

It’s because tools for quantitative analysis often become a crutch that relies too heavily on past data to extrapolate future outcomes.

It’s why the average life of a hedge fund, 6 years, is shorter than the average life of a single venture investment.

The best investors have no use for spreadsheets.

The best investors speak to people, read often, and they trust their instincts.