000 wrote: ↑Fri Dec 10, 2021 6:56 pm
HomerJ wrote: ↑Fri Dec 10, 2021 6:44 pm
Also, think of the profit implicit in that chart...
1% fees on $3 billion is $30 million.
It jumps to $20-$30 billion, and they are suddenly making $200 million a year. And they didn't ramp up their operations that much in one year. Maybe they hired a few more people. But they ran for 5+ years on the $30 million a year revenue, and suddenly they jump to $200 million?
Totally rewards taking crazy risks in a fund. If it crashes and burns, you close the fund, and start over. If you get lucky, you make a couple hundred million a year. Every year. For as long as you can convince people to stick with you.
So, yeah I'd sound really confident too about 40% returns over the next 5 years...
Every year she can keep the money under management is an extra TWO HUNDRED MILLION DOLLARS.
Their ER is not 1% though.
Really? Come on 000.. You're already THAT guy way too much of the time. Do you really have to be THAT guy all the time?
I didn't look it up... sorry... so it's 0.75%, not 1%.
Does it REALLY change my point that her fund went from making (ugh, now I have to open up the calculator app, which is what I was avoiding when I used 1%) $22.5 million a year, and apparently everyone was happy, because the fund hadn't closed...
To $150 million a year.
So every year she keeps people from bailing, she's making an extra $125,000,000. Each year. EVERY year.
Of course she's going to promise 40% returns, and she's going to sound super confident when she says it. And that's just one of her funds right?
You guys don't get it.
These managers don't get rich growing their own money over the long run with great investments. They get rich from the FEES.
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59