Lars Kroijer on the truth about hedge funds, demystifying investments and why you can’t beat the markets – MAF168

On the show this week is my guest Lars Kroijer, an author and former hedge fund manager.

We look at the truth about hedge funds, the content Lars creates to help demystify investments, and why it’s wrong to believe you can beat the markets.

Welcome to episode 168  of the Marketing and Finance Podcast.

Lars Kroijer on the truth about hedge funds, demystifying investments and why you can’t beat the markets - MAF168

What you’ll hear about in this episode

  • Why there’s a misperception about hedge funds
  • How Lars’ second book came about
  • Why Lars recommends index tracker investing
  • Why investing needs to be viewed as a long game
  • Why most people can’t beat the markets
  • What readers have learned from Lars’ book

Who is Lars Kroijer?

Lars is Danish. He’s been in England since 1999, and spent a decade in US before that.

He worked as an investment banker and hedge fund manager, setting up his own fund in 2002 and selling it in early 2008. He still sits on the boards of multiple funds.

His wrote his book to show the real version of the world of hedge funds and investment banking. Most of the other books, the media and popular culture portray hedge fund people earning and losing billions or buying Ferraris. After its success, he wrote another book, which led on to a series of videos on demystifying investments.

Summary of our chat

Lars says that TV shows such as “Billions” gives people the wrong impression of hedge funds. That the manager is a criminal, but because he’s rich and charming he gets away with it. It reinforces media stereotypes. So Lars wrote the book to show the reality of smart, hardworking, ethical people in finance.

Having experienced both sides of investing, Lars decided to write about how the average person has a minuscule chance of beating the markets. He believes many advisers or financial experts won’t tell people not to spend their money on beating the markets. So he wrote the book to make people realise it’s almost impossible to consistently beat the market. So what are the alternatives?

Lars doesn’t recommend evidence-based investing, and says people are better off with an index tracker. Most people will struggle to make the right investment choices, and it’s not a good idea to think you’re smarter than everyone else and you can beat the system, because it’s not easy to do.

People need to see investments as a long game. On average, over a long period of time, you will do better buying an index tracking investment.

In ‘Investment Demystified’, Lars says he wasn’t making a definitive statement about whether markets can be beaten or not, but that each individual has to decide if they can beat them. Most markets can’t be beaten, but it’s important to know which group you’re in, because it’s expensive to try.

Lars says that readers of the book have realised that they need time to learn about investments. Read the Financial Times and pick the right investment manager. This can be stressful when they’re also making decisions. Choosing an investment tracker instead and not trading it saves people a lot of time.

A marketing campaign or product that grabbed Lars’s attention

Lars has been following TransferWise, Revolut and similar products. The founders are young, tech-savvy people making traditional banks seem stodgy and old by making currency exchange cheaper or offering pre-paid credit cards without exchange fees. We all incur massive bank transfer fees but most people don’t know about them, so they’re challenging that.

Lars’s book recommendation

Lars says he has been reading a lot of books on AI (artificial intelligence) and enjoyed ‘Life 3.0: Being Human in the Age of Artificial Intelligence’ by Max Tegmark. If you embrace his arguments, then AI really matters, and it makes you think about the impact of the rise of computer-driven intelligence and what that means for our lives.

Links and contact details

If you have an investment-related question, Lars suggests posting this on his YouTube channel, so he can answer it more broadly and everyone can benefit from the answer. Search for ‘Lars Kroijer Investing Demystified”.

Read Lars’s book.

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