The Dependent Investor
A "capital gain truffle pig" scoffing at a 10-point move in the S&P 500—which represents roughly $100 billion in market capitalization—only does so because their income comes from management fees, not actual market exposure or performance. If it’s true that most of them underperform, then you don’t need to let them deter you.
Why? Because you can operate on their timeframe too and still make it look like a capital gain. But they can’t step into the short term and make it look like a trade.They can’t step into the short term and make it look like a trade because short-term trading requires real skill, precision, and risk management—qualities that can't be faked or smoothed out over time.
Here's why:
No Room for Error: In the short term, every tick matters. You can’t hide behind quarterly reports or vague narratives. If you're wrong, the market punishes you instantly. There's no buffer.
No Fee Cushion: Most asset managers earn a percentage of assets under management, regardless of performance. That model doesn’t translate to short-term trading, where you live or die by execution and actual results.
Speed and Adaptability: Short-term markets move too fast for traditional capital allocators. They’re used to making decisions over weeks or months, not minutes or seconds.
Lack of Execution Infrastructure: Short-term trading requires specialized tools, real-time data feeds, microstructure-level insight, and execution agility. Most long-term managers don't have this setup.
Emotional Fragility: Short-term trading forces you to deal with uncertainty, false signals, and fast drawdowns. Many long-only managers simply don’t have the psychological makeup for that pace or pressure.
In essence, you can operate on their time frame and beat them at their own game, but they can’t do what you do—because it exposes their dependency on passive flows, time arbitrage, and fee-based survival.