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How Hedge Funds Remove the Psychology of Investing

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If you don’t want to research investments and managing a portfolio yourself, go for an index fund. Index funds will save you time and effort. In order to find out more information about index funds, we went to the investment management company, Willow Creek Capital Management . According to a portfolio manager from Willow Creek, investing in index funds has another key advantage. Investing in hedge funds can help you get better returns by removing the psychological biases that individual investors must overcome to manage a portfolio effectively. By comparison to the average equity investor, who achieved an average annual return of just 3.66%, from 1985 to 2018, the S&P 500 returned 10.35% per year on average. That explains the huge gap between individual investors and the S&P 500 index. Experts from Willow Creek Capital Management,  in affiliation with the University of Berkely , point out that individual investors suffer from psychological biases such as: ...

Active and Passive Strategies for Investing

There are two main methods for investing in stocks and they are called active and passive management. The difference between them has nothing to do with how much you are active or passive. Active investors get to choose their own stocks, bonds and other investments; whereas passive investors leave their holdings follow an index created by some third party.  As a successful businessman with over 25 years in the investment management industry, the CEO of Willow Creek Capital Management has gained an in-depth perspective and knowledge of how investing works. When people talk about stock investing, they usually mean active investing. Most people may think that this in fact is the superior strategy, but that isn’t necessarily the case always. On the long run, most actively managed stock funds have underperformed S&P 500 index, the most popular and prominent benchmark for index funds. "That’s way many people prefer to go with an alternative to active management. Some people j...

MBO (Management By Objectives) - Managing Organizational Goals

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MBO  (Management By Objectives) or management of organization goals is a strategic tool used by Willow Creek Capital Management in controlling company's work and investments. The purpose of this tool is to establish a balance between the goals of the firm and the goals of the employees. With the aim of achieving greater efficiency and achieving employee motivation results, this is quite a crucial factor. By using the MBO tool, Willow Creek has created an efficient management system where employee goals are aligned with the goals of the company.