> If 99% of people who buy corporations for a living can't beat a monkey throwing darts over time...why do we believe people who run corporations for a living are any smarter? They're both looking at the same corporate balance sheets and industry trends!
The market acts as a filter which means that people still need to create and run create the enterprises for it to be able to value them.
Anecdotally, having spoken with both CEOs of very big name billion+ dollar companies and with many money managers, professional investors, and various other finance hucksters, I can say with assurance that the high end CEOs have considerably greater cognitive ability on average. People like Warren Buffett represent a kind of best of both though, since he is a successful CEO as well as investor. I think it comes down competition. Managing someone else's money for a 1-2% vigorish isn't really an activity that takes much investing skill to be successful at, especially since nobody else knows how to predict dynamic chaotic systems either.
Also, given how many new businesses fail, there is probably some survivor bias here too on CEO performance.
The market acts as a filter which means that people still need to create and run create the enterprises for it to be able to value them.
Anecdotally, having spoken with both CEOs of very big name billion+ dollar companies and with many money managers, professional investors, and various other finance hucksters, I can say with assurance that the high end CEOs have considerably greater cognitive ability on average. People like Warren Buffett represent a kind of best of both though, since he is a successful CEO as well as investor. I think it comes down competition. Managing someone else's money for a 1-2% vigorish isn't really an activity that takes much investing skill to be successful at, especially since nobody else knows how to predict dynamic chaotic systems either.
Also, given how many new businesses fail, there is probably some survivor bias here too on CEO performance.