Is there a global elite out there? You bet there is. Do they operate under different rules than you or me? Sometimes yes, sometimes no.
There’s no question that the rich can get richer. Hedge fund managers George Soros and James Simon earned over $3 billion last year betting against the US housing market. And they can use vehicles like Credit Default Swaps that aren’t available to us mere mortals.
But do the super-rich possess super-powers? Not likely. Studies show that the average hedge fund investor actually earned less than someone who just bought a stock market index fund. Index funds may be boring, but they’re fair, cheap, and widely available. Chances are, a hedge fund’s super-sized returns one year will be offset by losses another. But those don’t always get reported.
The global elite may feel that they’re special, but they put their pants on one leg at a time just like the rest of us. Investment skill is hard to develop. And you’re as likely to find it at a small trust company as at some big investment bank.
Douglas R. Tengdin, CFA
Chief Investment Officer
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