By James Saft
(Reuters) – Fund and pension investors who are watching their biotech and social media stakes melt before their eyes may well feel they’ve had their pockets picked by self-serving investment managers.
But actually they are also helping to fund, if only as an unintended side-effect, useful innovation which might not otherwise happen.
The lesson here: career risk makes the world go round.
William Janeway, economist and venture capital veteran, put it well at the Institute for New Economic Thinking conference last week:
“The question is: how long can you afford to be wrong before they take your money away and you are no longer in the market?
“It does not have to be a psychological propensity for excessive risk taking, it is simply a matter of fact that in the ontologically uncertain world in which market participants live you cannot afford not to follow the crowd. Unless you are Warren Buffett and nobody can take your money away.” (here) (here%20and%20Investment%20CIGI-INET%204-11-2014.pdf)