Research Review: Asset management, overconfidence and market discipline

Ron Bird  |  Investment Management Research Program  |  19 December 2018  |  1.00 CE

Asset management is a fascinating industry. Bill Sharpe characterised it with a couple of observations. The first is that investing is a zero-sum game, meaning that on average all investments average the market return, and that for every winner there has to be a loser. Sharpe’s second observation is that it takes about 40 years to determine the talent of a manager as a result of markets being so noisy, hence it is almost impossible to judge quality. The implications are that very few managers will add value (after costs) but never...

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