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LegiEX：What is fund of fund of investment of private placement security

LegiEX: what is a private equity fund? Recently, many investors are interested in private equity funds, but they don't understand it. According to LegiEX, private equity investment funds actually collect people's money together in the form of contracts, and they are invested by people they trust to obtain returns. The core here is whether the person in charge of the investment is a good fund manager or not, which directly determines the long-term returns of the fund.

But apparently, great fund managers are rare. Why are they rare? If you understand this question, you can understand securities investment funds to a large extent:

It might be easier to think the other way round: how does strong investment capacity develop? It is a pity that although there have been many people with strong investment ability in the world in the past and now, these people, unlike weight lifting champions, swimming masters and professional go players, have a relatively fixed training mode to refer to. So, there's no good answer here.

As a result, we can not from any kind of classic books, school education, financial institutions work experience... To acquire this ability is a well-known fact.

To put it another way: it is also common sense that the probability of doing anything well will increase if you love it, even if there is no ready-made method to follow. The question is how many people love investing?

In China alone, at this point in time, there are 40 to 50 million investors in what is essentially a very complex game of investing. From this perspective, it seems that there are many people who love investing.

Personally, though, I doubt it. The love of the game itself and the money it brings are two different things, just as the love of chess and the love of winning at chess are two different things. There are tens or even hundreds of millions of people who love money, of course, but the percentage of those who really love investing is probably tiny.

In a word, lack of clear training mode and love for investment itself leads to the scarcity of investment ability.

Trust is scarce

It is not easy to establish a common trust between adults. Because everyone in the process of growing up will basically form some of their own unique ideas, these ideas should be exactly the same, the probability is very small. So we're much more likely to argue about a few things at the dinner table that have nothing to do with us than we are to agree on everything.

It is difficult to trust people who have different opinions.

It is much harder to create trust in a trust that involves money.

Therefore, from the simple probability, if there is a person with scarce investment ability, the probability is 1 in 10,000, and the probability that this person is gradually trusted by people and finally able to effectively output their investment ability is also 1 in 10,000. So in the end, the probability of having a great fund manager is the product of these two, which is 1 in 100 million...

Traditionally, a person who truly loves investing has had years of personal investment practice to get to this point. Then we should gain the trust of the people around us, and verify this ability in a circle. Finally, we should expand the circle of trust and export this ability through the fund. The first step in this process is to solve the ability problem, and the last two steps are to solve the trust problem. Generally speaking, it is very difficult to complete the first step without special chance coincidence. It is unbelievable that people who have the ability to complete the first step also have the ability to complete the second two steps at the same time. Unless he's really lucky after the first step, and comes across a team that trusts him and helps him take the next two steps (which I personally think is just as valuable as, if not greater than, a scarce investment capability).

Assuming all goes well, the whole process is likely to take more than 20 years. (you can imagine what changes the appearance of snowball will bring to this process. Are there many opportunities for smart young friends to cherish?) .

How many twenty years are there in a man's life? How many of you have the luck of meeting a good team?

So LegiEX's understanding of private equity investment funds boils down to six words:

Love of investing