Why don’t we see star investors like Warren Buffett or George Soros in today’s financial markets? To answer this question, we need to compare the investment environments of the past and present. What are the reasons behind this?
1. Market Changes and Increased Competition
The investment market has changed significantly from the past. George Soros described his early investment days as “a one-eyed man among the blind.” At that time, there was a significant asymmetry of information, and only a few investors could identify and exploit market inefficiencies. However, today, with the development of the internet and technology, information spreads rapidly, and many experts compete based on the same information.
During Soros and Buffett’s active years, there were relatively fewer investors, and they could dominate the market with their unique insights and experience. Nowadays, tens of thousands of quantitative experts trade using algorithms and data, reducing the effectiveness of traditional investment strategies like those of Soros.
2. Overall Skill Improvement and Intensified Competition
Past investors could operate in a less regulated and competitive environment, but today’s investors face much more intense competition. As all investors’ skills improve, the competition to achieve outstanding performance becomes fiercer. This is similar to why there hasn’t been a .400 hitter in baseball since 1941. Harvard paleontologist Stephen Jay Gould explained that the reason there hasn’t been a .400 hitter since 1941 is due to “overall improvement in performance quality.” Similarly, in the investment world, as all investors’ skills improve, it becomes harder to achieve outstanding performance.
3. Advances in Technology and Data
Today’s investors can utilize much more data and analytical tools than in the past. This increases the accuracy of investment decisions and quickly eliminates market inefficiencies. In the past, investors like Soros and Buffett could beat the market with their secret methods, but now those methods are no longer exclusive. As all investors use similar tools and information, the competition to achieve outstanding performance has become even fiercer.
4. Limitations of Large Capital
Investors managing large capital face greater constraints compared to smaller investors. When Soros and Buffett started with small capital, they could achieve high returns, but as their capital grew, it became harder to achieve the same performance. This is like comparing a high school quarterback to Tom Brady in the professional football league. While small capital can achieve outstanding returns, it’s harder to achieve the same performance with large capital.
In Conclusion
In conclusion, the reason we don’t see another Warren Buffett or George Soros is due to various factors, including market changes, overall skill improvement, advances in technology and data, and the limitations of large capital. However, this doesn’t mean we should stop seeking new investment strategies and opportunities. In this environment, we should strive to find new paths to success through more creative and innovative approaches.
Reference: Market Watch, “Why we’ll never see another Warren Buffett or George Soros ever again”