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Investor Howard Marks gives advice to future hedge fund managers

Investor and billionaire Howard Marks told those who want to launch their own hedge fund and manage it, that the first step is to find a time machine. “It should begin in 1968” – the year he left graduate school. “Those who begin in 2019 will not meet the same opportunities that we faced.”

Factors such as passive investing, driven by computers, make it harder for people to make a career out of investing, which most computer strategies can beat as much as 95% of investors.

According to data from 2017 until 2018 the number of newly-founded hedge funds was cut almost in half.

The passive trend did not take place because of the passive returns were so good, but because the active returns were so weak.”

However, Marks sees room for humans in investing to provide what he called “exceptional insight”. The abundance of computerized investment options not only pushes people out of space but also reduces the cost of pay as managers compete with a cheaper passive product.

“To launch a fund, you have to do it because you love it, and if it sounds tempting, then I would do it” said Marks.

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