At Wharton, many of our graduates think about going into hedge funds, and the announcement of who made what last year helps to explain why - the top twenty-five earners averaged a billion dollars each on the year.

I have no regulatory angle on this, other than to note that it is conventional wisdom that it is crazy to decide to beat the market - and that it has become even crazier to do so in light of the quantitative strategies employed by sophisticated investors.  But the interesting thing about the winners this year - they are pictured above - is how many of them are good old fashioned stock pickers, deploying investment strategies that, while riskier than hedged strategies, are pretty easy for the likes of you or I to understand.  Strategies like "invest in banking" (David Tepper and John Paulson), invest actively (that's corporate raider Carl Icahn's approach), buy Sears and sell the real estate (that's part of what Edward Lampert does), and make currency or energy bets (that's Soros and John Arnold, respectively).  These guys don't eschew numbers, but the only true quant in the group is James Simons, though Ken Griffin and Steve Cohen probably employ quant strategies for their funds, which do everything.

In other words, these aren't complicated global multistrat approaches identified by computer programs of the likes pursued by Long Term Capital.  This is stuff like "buy gold," and "sell euros."  And that is the kind of bet which is nothing more than a bet that you can beat the market, if you're smart enough.

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