David Einhorn's Greenlight Capital returned -2.9% in the second quarter of 2021 compared to 8.5% for the S&P 500. According to a copy of the fund's letter, which ValueWalk has reviewed, longs contributed 5.2% in the quarter while short positions detracted 4.6%. Q2 2021 hedge fund letters, conferences and more Macro positions detracted 3.3% from Read More
I think that a lot of people believe that the most successful managers are the ones that can predict the future the best. I think the most successful managers [are] the ones that [say], “Everyone’s playing one game, I’m going to play a different game, and my game is actually going to have more pieces.” Those pieces can do a better job of capturing alpha in the marketplace.
As the world becomes more complex, and as these opportunities become shorter and shorter lived, you have to be fast to take advantage of dislocations. Being fast is only made possible through technology today. Whoever has [the] technology is going to be fastest. Whoever is fastest is going to win.
Think about transportation. Turned out when man was initially trying to get somewhere, they would walk somewhere. Then they discovered shoes were a less painful way of walking. They discovered the wheel, they came up with the car. The first cars you had to crank, you had manual steering. Today, you press a button and you parallel park. Tomorrow, your car is going to drive itself.
But here’s the thing—is that all that interesting if you aren’t telling it where to go? And I think that that’s what it comes down to—you still need a human to say where [you should] go, or you need a human to say, “How do I know where I’m going to go?” And maybe the computer is telling you how to get there. But I think that car analogy tells you where we’re going to be—not in 10 years, not in five years—in three years’ time.
I think it’s really important to understand this is not about technology. This is about the willingness to evaluate your investment process and redesign it so that you get all the best elements of your process [and] by leveraging technology, speed it up in a way that makes it impossible to compete with.
The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AB portfolio-management teams.
Article by Ashish Shah, Alliance Bernstein