The Peculiar Asset Management Industry0Asset management is a highly unusual and somewhat baffling industry.  We see seven main examples of just how peculiar our industry is, relative to other industries:01. The asset management industry collectively plays a near-zero-sum game.  Four score and seven years ago...  By contrast, most industries are positive sum: if you eat a great steak dinner, it doesn’t imply that others have to eat hamburger.  In asset management, each new Money Manager that is able to generate Alpha (returns above the passive benchmark performance) normally does so at the expense of other Money Managers who underperform.  Your own investment’s value may change because of a change in value of the underlying asset and/or market preferences.  However, few investors can impact the value of the underlying asset, except for typically private equity and venture capital investors.  And only celebrity investors like George Soros can influence market preferences.  In fact, it is mathematically impossible for the median investor in a given publicly-traded sector to beat a low-cost index of that sector, after expenses.  Money managers playing a positive-sum game include those who focus on well-developed sectors for which indices are not readily available (e.g., private companies, frontier markets) and/or nascent asset classes (e.g., internet domain names, lifetime individual income, litigation finance, virtual currencies, cryptocurrencies, divorce loans, receivables, patents, frequent flyer miles, timber, farms/ranches, art, collectibles, or carbon credits.02. The asset management industry rarely delivers the alpha that it promises. Delivering alpha on a net of fees and costs basis consistently over many years is incredibly difficult. For example, hedge funds on average have underperformed on a net of fees basis in both US equities and bonds since 2000.  Hedge fund performance looks attractive for the period of 1970 - 2013 (See Picture 2). However, one can argue that hedge funds were different in the 1980s and 1990s as the industry was smaller and more nimble.  Recent hedge fund underperformance, coupled with steep typical 2% management and 20% performance fees and additional hidden costs that can be charged to fund investors, make investors more likely to ask que