zlacker

> a hedge fund can beat the market for 2-4 years but at 10 years and up their chances of beating the market go to very close

In that case the winning strategy would be to switch hedge funds every 3 years.

>>Eddy_V+(OP)
The problem is that you don't know in advance which will be doing well when.

>>Eddy_V+(OP)
Except you don't know which fund is going to "go on a hot streak" or when the magic will end. The original statement only holds when looking at historical data; it's not predictive.

>>Eddy_V+(OP)
> In that case the winning strategy would be to switch hedge funds every 3 years.

When you flip a coin, you can easily get all heads for the first 2-4 flips, but over time it will average out to about 50% heads. It doesn’t follow from this that the winning strategy is to change the coin every 3 flips.