Zaraki_Kenpachi
Member
It's very much a real systemic problem. It's like how as a trader you can't keep a high rate of return up as your portfolio grows because eventually people just start copying what you do.
This is actually incorrect. It is a problem usually, not because people are copying you, but because you have too big of an impact on the market. The long shots or other choices you used to make were when you were too insignificant to affect the market. Now that you've grown larger it's harder to take those positions that netted you the high returns and success because they alter how the stock trades and the positions people take because now pumping $20MM dollars into a stock/security and pumping only $3MM into it causes a huge fluctuation on how it affects that security. It's pretty much why a lot of news firms say that large hedge funds have underperformed the market so badly in recent times compared to when they were deemed this illustrious thing that would make you millions. They said the solution is that they should start having target dates and either kill the fund or seal it off after X amount of dollars is added to the portfolio and create a new one instead.