What happens when everyone is working with the same toolbox and plans? Everyone builds the same thing. To stand out in this enviroment, you have to be better than everyone else at using the tools (Warren Buffett) or you have to make new, different tools (James Simons).
Let's use a NASCAR analogy. How do you consistently win NASCAR races, which have strict guidelines for the car? You either must have a better driver & crew, or bring in a Formula 1 car. In NASCAR, fielding a non-regulation car is cheating, fortunately the rules on using new technology for investing are not as restrictive.
In that regard, the article below examines the fact that there is less originality in hedge fund land than there has been previously.
Study: Hedge Funds Crowding Into Same Stocks
This is the personal blog of Emory Redd.
This blog is not investment advice. This is not a solicitation to invest. Don't take candy from strangers.
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