The Anti Cramer portfolio is not a sufficient contrarian approach, because the Cramer portfolio also underperforms similar to a random walk. Put another way, the opposite of a random walk is another random walk.
Yes, following that guy it is understandable why he would never be a hedge fund manager for a long time. When it comes to investing he is stupid as a brick.
"...Hedge funds exhibit no ability to time sectors or pick
better stock styles. Surprisingly, we find only weak evidence of differential ability between hedge funds. Overall, our study raises serious questions about the perceived superior skill of hedge fund managers..."
But that’s not the benefit of putting your money in a hedge fund at all, the benefit is hedging against losses, so that you don’t have to worry about losing money when everyone else is.
Historically, hedging was the reason when the first such funds launched that allowed them to use a specific regulatory loophole. The name has stuck around much more so than the strategy, though, nowadays there are entire classes of hedge funds that don't necessarily work like that anymore (eg long-only, special situations arbitrage, global macro,...). Nowadays it pretty much just means a specific legal structure, if it means anything at all, since it's become such a widely used term.
