Quotes About Risk-adjusted

most important distinction in the investment world does not separate individuals and institutions; the most important distinction divides those investors with the ability to make high quality active management decisions from those investors without active management expertise. Few institutions and even fewer individuals exhibit the ability and commit the resources to produce risk-adjusted excess returns.

Unlike some hedge fund managers who also had a waiting list, we could have increased our fees by raising our share of the profits or adding more capital, thereby driving down the return to limited partners. Such tactics by the general partner to capture nearly all the excess risk-adjusted return, or "alpha," rather than share it with the other investors are what economic theory predicts. Instead, I preferred to treat limited partners as I would wish to be treated in their place.

Junk-bond investors cannot win. When fundamentals improve, stock returns dominate bond returns. When rates decline, noncallable bonds provide superior risk-adjusted returns. When fundamentals deteriorate, junk-bond investors fall along with equity investors.