This month, we go deep into the history of Vanguard to analyze structural differences between public and private markets, consider the real impact that underperforming fund managers have on society, and remember that successful investing is a perpetual balancing act between belief and doubt.
#1 – “Vanguard” Episode – Acquired Podcast
“It’s not like you can just call up your broker and say, ‘Hey, I want some shares of Anthropic today’ and execute an order. You need to pay for access and that’s what venture capital and private equity are doing. In private markets, the assets have to pick you back. In the public markets, they do not.” – Ben Gilbert (emphasis added)
This was the best articulation I’ve heard for why manager selection matters so much in private markets. For venture capital in particular, the hottest companies get to choose which funds they allow into their cap table. Unfortunately for individual investors, these premium allocations often go to elite, brand-name VC firms whose funds are not open to the general public.
#2 – “Trillions” by Robin Wigglesworth
“However, in retrospect Seides does make one damning concession: If he was a young man today, he would not choose a career in investing. The profession has become increasingly competitive and difficult, and judging whether someone’s results are due to luck or skill is almost impossible. Moreover, it is a rare career path where experience does not necessarily make you more proficient, and being mediocre is of no value. ‘Your average doctor can still save lives. But your average investor detracts value from society,’ Seides admits.” – Robin Wigglesworth (emphasis added)
This book pairs perfectly with the Acquired podcast episode above and made for a great month of Vanguard-related content. This quote from Ted Seides (famed for his million-dollar index fund bet against Warren Buffett) illustrates bluntly how active fund managers often underperform their benchmark due to higher fees and leave investors worse off than if they had simply chosen a low-cost index fund.
#3 – “What’s Going On in Private Credit?” by Howard Marks
“True believers make the most money in manias, and skeptics lose the least when they crash. But the key to the investment success we aim for lies in always maintaining a healthy balance between belief and doubt.” – Howard Marks
I learn something every time I read an Oaktree memo, and this quote is a masterclass in market psychology. As investors, we must constantly balance belief (“Could this company’s new technology really add trillions in revenue?”) with healthy skepticism (“How much of that potential is already priced into the current valuation?”).
My goal for these blog posts is to provide useful information so that you can make more accurate decisions.
- Noise includes facts/data/news that cannot be processed into useful information (<— WHAT MOST STUFF IS)
- Useful information can be used to make more accurate decisions (<— WHAT I’M TRYING TO PROVIDE)
Since there is an endless and ever-growing amount of things to learn, I hope that these posts are helpful in summarizing important topics related to investing.
