Basically the title. Hedge funds underperform every year as compared to broader ETFs like S&P500 by more than 10%! Given this, who invests in hedge funds? Are they stupid or am I stupid?
[https://www.aei.org/carpe-diem/the-sp-500-index-out-performed-hedge-funds-over-the-last-10-years-and-it-wasnt-even-close/](https://www.aei.org/carpe-diem/the-sp-500-index-out-performed-hedge-funds-over-the-last-10-years-and-it-wasnt-even-close/)
In: 128
Hedge funds can do a lot of extremely high risk stuff like leveraging their capital to eye watering levels to make risky bets, or shorting the same stock multiple times over to such a degree that the short bet itself causes the stock to crash in value. Because of the wealth of the individuals who are funding this, the system is rigged to ensure that if these massive risky bets go awry, the losses don’t actually come.
Most of this happens behind closed or opaque doors so the general public is not overly aware.
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