Underperform

Finance Allah shmoop What is the buy side All right

people It's a rumble a fight a tale of two

cities Jets Sharks Capital its Montagues London Mogadishu Some like

that Wall Street has aligned itself with both sides of

the holy transaction Will First there are cellars of securities

or assets that you know them as stockbrokers and realtors

and used car sales people in one form or another

They have no responsibility really as to whether or not

the investment did well or poorly they get paid a

commission and are highly incentivized to transact That's the only

way they get AIDS They don't get paid to be

right or accurate or money makers Those are cell ciders

right They sell they get paid on a commission and

well that's it Okay so then who are the bye

siders Well they're buyers of securities Invest doors develop oars

and well they come in a few flavors at the

retail level There Aunt Mary who just paid twenty two

grand for her three year old Ford Focus with the

built in karaoke machine Yes that's our crazy aunt She

bought it in part because the witty sales guy told

her It'd be a good you know investment Well according

to this guy she also made an investment in her

freedom to go anywhere any time Tio not rely on

uber by side at the retail level is Uncle Bill

who just bought a hundred shares of Amazon through his

favorite stockbroker smiling Eddie at the professional level will the

buyers or by side people are these guys and gals

They have catchy job titles like mutual Fund Manager hedge

fund manager private equity fund manager venture capitalist and so

on And they're generally highly educated and ruthlessly called for

being talented Ah bad money manager is for fired really

quickly and generally well Doesn't work in the industry again

Why Well it's just too expensive to keep a bad

money manager on the payroll who underperforms their results are

highly measurable Ahs Well most go up against Ticker Espy

Why it's an index fund of the S and P

five hundred or something similar Yeah spy is this thing

Here's the chart The index fund for S and P

five hundred If you can beat that fund regularly while

you're a hero if you can't then like well why

would investors give you money for which you charged in

a one percent or more a year to manage If

you're in a mutual fund when the investors could well

get the same or likely much better results by just

putting their money into an index fund like why would

they give it to you if you don't have enough

Alfa Teo you know beat the market well Those index

funds cost like point two percent a year to manage

like a fifth of a mutual fund and in modern

history Well guess what In big bull markets index funds

perform a lot better than mutual funds So to sum

up a stockbroker Ieast someone from the sell side might

sell you five grand worth of a mutual fund But

a fund manager would be the one in charge of

putting that money to work I'ii buying ten thousand shares

of Microsoft at fifty box believing they'll be at sixty

and change in a year Right So the buy side

people get measured on their performance not upon how much

volume they transact So that's it All right people let's 00:03:16.95 --> [endTime] get ready to rumble eh