The Times article didn't mention the other characteristics tested by the study:
"We first construct probably the most comprehensive dataset on manager characteristics based on more than 4,000 hedge funds covered by TASS between 1994 and 2003.4 The dataset covers a wide range of information on personal, educational, and professional backgrounds of managers of most hedge funds. Specifically, we collect information on the following six characteristics of the lead manager of each fund if such information is available: the manager's age (AGE), the
total number of years of working (WORK), the number of years of working at the specific hedge fund (TENURE), the composite SAT score for the manager's undergraduate institute (SAT), whether the manager has a CPA or CFA, and whether the manager has an MBA degree. Broadly speaking, the six characteristics can be divided into two groups: SAT, CFA/CPA and MBA dummies represent intelligence and education;5 AGE, WORK, and TENURE could represent working experience and career concern."
Their conclusions:
"Specifically, we find that managers from higher-SAT institutes tend to take less risks (measured by either overall return volatility or loadings of hedge fund returns on systematic risk factors) and have higher raw and risk-adjusted returns. On the other hand, we find that managers with longer years of working tend to have lower raw and risk-adjusted returns and take less risks. We also find that younger and better-educated managers tend to attract more capital inflows. These results are very robust to the different risk-adjustment benchmarks, sample periods, and
types of funds (funds of funds vs. regular hedge funds) we consider."
The way they constructed their database raises some red flags for me:
"Out of the 4,000 funds covered by TASS, we are able to identify most of the characteristics of the lead manager for 1,002 funds."
I wonder about biases introduced by the rejection of 3/4 of the funds due to insufficient data. Did managers of successful funds tend to preferentially withhold information, e.g. not mentioning a non-"elite" education if they wanted to emphasize just the results of their funds?
Those considering using this finding as a basis for investment might also consider Kedrosky's research comparing the golf handicap of CEOs with the company returns to shareholder:
I thought the article was just an interesting aside to the on-going discussion here of whether schooling matters for "success". As someone who was a pretty poor student for many, many years, the arguments/evidence is really only interesting to me as a way to inform that discussion. To me, this was a just another data point.
Yeah, I think the recent quality of submissions to the site have suffered - at least if you measure them against the name of the site - 'Hacker News'. It seems that voting by itself doesn't weed out non-topical stuff.
Perhaps this could be fixed by asking the submitter to reconsider if the link they are about to submit really has anything to do with hacking or entrepreneurship.
The problem is that too much of the stuff that gets submitted is "content." Good writers don't refer to their writing as content. Why? Good writing expresses ideas, and no one refers to their ideas as content. You'd never hear pg referring to his essays as content, which is probably why they're so popular.
It's actually kind of funny. You'd think there would be lots of intelligent people who had interesting ideas and wrote them down, but really there aren't.
Maybe more accurate to say there are a lot of intelligent people with half-formed ideas they never fully explore by writing them down. Writing is not like hitting print.
Certainly part of the problem is the time barrier. IIRC Guy Kawasaki said he averages seven hours per post. It's about the same for me for my posts that have made techmeme or reddit. I'd love to sit down and blog something about the social policy implications of pygmalion effect or whatever but it's hard justify blowing off an entire day more than a couple times a month.
The other problem though is that there is very little theory surrounding what actually makes something insightful, informative, interesting, etc. There are hundreds of books or grammar and style, but try looking for a book on insightfulness. Google turns up literally zero useful results. If there were a book like Strunk/White but on substance, not style, it would greatly ameliorate the problem. I've been working on the problem for a while now myself, not from the perspective of a great writer but rather from the perspective of someone who knows what creates value for him as a reader. The problem is before you publish something like that it kind of has to be perfect.
The recent quality of comments to the site suffered, too.
Is it only my impression, or recently, instead of valuable on topic comments, we see overload of discussions why switching to "Hacker News" was a terrible idea, and endless threads how to improve the site?
"We first construct probably the most comprehensive dataset on manager characteristics based on more than 4,000 hedge funds covered by TASS between 1994 and 2003.4 The dataset covers a wide range of information on personal, educational, and professional backgrounds of managers of most hedge funds. Specifically, we collect information on the following six characteristics of the lead manager of each fund if such information is available: the manager's age (AGE), the total number of years of working (WORK), the number of years of working at the specific hedge fund (TENURE), the composite SAT score for the manager's undergraduate institute (SAT), whether the manager has a CPA or CFA, and whether the manager has an MBA degree. Broadly speaking, the six characteristics can be divided into two groups: SAT, CFA/CPA and MBA dummies represent intelligence and education;5 AGE, WORK, and TENURE could represent working experience and career concern."
Their conclusions:
"Specifically, we find that managers from higher-SAT institutes tend to take less risks (measured by either overall return volatility or loadings of hedge fund returns on systematic risk factors) and have higher raw and risk-adjusted returns. On the other hand, we find that managers with longer years of working tend to have lower raw and risk-adjusted returns and take less risks. We also find that younger and better-educated managers tend to attract more capital inflows. These results are very robust to the different risk-adjustment benchmarks, sample periods, and types of funds (funds of funds vs. regular hedge funds) we consider."
The way they constructed their database raises some red flags for me: "Out of the 4,000 funds covered by TASS, we are able to identify most of the characteristics of the lead manager for 1,002 funds."
I wonder about biases introduced by the rejection of 3/4 of the funds due to insufficient data. Did managers of successful funds tend to preferentially withhold information, e.g. not mentioning a non-"elite" education if they wanted to emphasize just the results of their funds?