A Few Retain Cachet

Chidem Kurdas

Can active traders persistently make money? Those who say “yes” point to some traders who seemingly have done so—often themselves.

Then there is the perception bias Nassim Taleb used to talk about. If you take any group of traders, some will do well out of sheer luck. Track those and some among them will be lucky again. And so on. It looks like the top performers have special skills, but that is deceptive. Lady Luck can desert them at any time. You might as well buy some indexes–as indeed most people do.

Nevertheless, professional investors believe that a few long-established managers have proven themselves and appear to have a system for more or less persistently making money.

While people have different views of managers, some names are repeatedly mentioned. One is Viking Global, the equity shop led by Andrea Halverson, possibly the most successful alumnus of Julian Robertson’s Tiger Management.

The other is the Kensington and Wellington funds managed by Ken Griffin’s Citadel, proving that investors are willing to accept very bad short-term performance, especially if it happens at a time the financial sky seems to be falling. In the 2008 crisis these funds lost around half their value. But they recovered quickly

So large investors demonstrate their confidence by continuing to channel money to the funds, as they did earlier this year.

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Tags: Julian Robertson, Nassim Taleb