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![Philip Baker](http://web.archive.org./web/20170530085724im_/http://www.afr.com/content/dam/images/1/4/1/y/s/n/image.imgtype.afrAuthorAvatar.120x120.png/1435901920075.png)
It's one thing for difficult sharemarkets to shake out retail investors, but it's something altogether different when they force the professionals to throw in the towel.
It doesn't happen all the time, but it's not that unusual for a professional fund manager to call it quits although when it does occur it always causes a commotion.
What's really important for other investors is to work out why it's happened and perhaps find ways to take advantage of it.
In 2000, and despite a stellar 20-year track record, Julian Robertson, then head of US hedge fund Tiger Management, shut down his operations after being caught out by the incredible rally in tech stocks.
A successful value investor Robertson was accused of being old-economy at a time when any old tech stock was booming.
His poor performance made it tough to justify the traditional payment structure of an annual management fee of 2 per cent of assets and a performance fee of 20 per cent of any gains. The old 2 and 20 that still gets charged today.
In the end, he was hit so hard by redemptions and poor performance that he shut up shop.
But just a couple of months later, if he was still in business, he would have enjoyed one of his best weeks ever as the Nasdaq tanked.
Titans like George Soros and Stanley F. Druckenmiller have also taken down their shingles at times.
This week fund manager Philip Parker from the Altair Australian share fund made the headlines when he said he was handing back hundreds of millions in cash to his investors.
The reason given was the financial markets were getting too dangerous with the property market a "calamity" and no value left in shares.
It's just the sort of bold move that will have contrarian investors interested as there's nothing like taking advantage of a distressed seller.
But it also begs the question that if it is getting too hard for the pros then maybe it is best to just buy an index and forget about it.
When it comes to investing there's an old rule that says because humans run companies you also need human judgment when it comes to investing in them.
That theory, however, is being tested as the debate between the merits of active and passive management rolls on.
The rise and rise of robots and algorithmic trading looks to continue if the likes of BlackRock, the biggest manager of money in the world, are any guide.
The fund manager this year decided to revamp its business and will now rely more than ever on robots to make investment decisions.
In the war between the two styles, more and more investors are betting that the index-hugging robots are going to win out more often than the stock-picking humans.
Vanguard, for example, has been a huge winner in this move.
In 2016, the index hugging manager enjoyed more net inflows than all of its competitors put together, almost $US290 billion compared to $US244 billion, according to Morningstar.
But some people don't like to index their money. They like the idea of someone being that good that they can buy low and sell high all the time.
Even if that costs them more in fees.Indeed, Parker said the large fees he charged were part of why he has called it quits.
How could he take that fee when he knew a disaster was just around the corner?
Others might have just cranked up their short selling to cash in on any major sell-off.
For some old-timers it was an important sign that well-known perma-bear Gerard Minack was part of Altair's investment committee.
The former Morgan Stanley strategist was well-known for criticising just how short-sighted financial markets had become but he would also talk of the industry's "dirty little secret".
And that was that the average professional underperforms. He once told the The Australian Financial Review, investors would be better off buying the index, more often than not, to beat the pros.