Thread on complexity in investing.

My observation is that the best investors keep it simple.

L/S funds are a classic example of using complexity to impress institutional and high net worth investors, ultimately to charge them higher fees. 1/5

How many conversations have we all been in where L/S managers start rattling off stats about gross and net exposures, delta hedges, and who the best primes are for execution.

None of these things has anything to do with investing in actual businesses. 2/5

Plus, there's the reality that short selling does not make money. Even the greatest short sellers around like Jim Chanos lose money end to end.

@NeckarValue has an awesome thread on Bob Wilson, who maybe broke even as a short seller and argued staying net long was critical. 3/5

Reality is that we LOs aren't any different as an industry. We come up with reasons to own overly diversified portfolios, often in complex situations, and then trade them constantly.

End result is overcharging for poor returns when index funds would be a superior solution. 4/5

The greatest investors around-Buffett, Munger, Smith-keep it simple. They buy a handful of outstanding businesses at great prices and hold onto them.

It's exactly what you'd think as a young kid: buying good businesses is the best way to make money, not finding complexity. 5/5