weeatquince comments on Introducing Antigravity Investments: Free Investment Management for the EA Community - Effective Altruism Forum

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Comment author: weeatquince  (EA Profile) 02 August 2017 10:42:39AM 1 point [-]

Can you say something on the risk of lots of EAs putting their funds in the same space with the same investment manager? Should the community not diversify.

Comment author: Brendon_Wong 03 August 2017 09:11:04AM *  0 points [-]

I assume your question is regarding the risk of everyone following the same investing strategy as opposed to having their funds custodied at a particular firm—our financial health has no impact on client funds because our partner SIPC-member brokerage firms will be holding the funds and not us. Regarding following the same investing strategy, that really depends on how EAs are already doing and what the alternative investment strategy is. Individual investors tend to underperform common benchmarks (https://www.umass.edu/preferen/You%20Must%20Read%20This/Barber-Odean%202011.pdf) but perhaps EA investors do better. I think that it is quite possible many EAs are currently suboptimally managing investments and that many EAs following an exceptionally well-designed strategy might produce better outcomes. If the majority of EAs are currently following a very basic strategy such as 100% stocks, then the community is vulnerable to stock market volatility and having many people follow a more diversified strategy will reduce overall risk. It might be better for everyone to diversify into different strategies, but having one trustworthy firm offer many strategies doesn't seem to be definitely worse than non-aligned firms offering strategies if the strategies are comparable.