Just a quick note on how to "create" expertise through what I call piggybacking--taking an area where you know your stuff and using it to manufacture expertise where you don't know so much: I once read an essay by legendary quant investor James Simons in which he explained his famous practice of hiring only scientists, not Wall Street people. It all started, he revealed, when he was just starting out in the money management business, and really didn't know anything about finance. So he had no way of evaluating whether the MBAs or finance phDs he was interviewing knew what they were talking about. What Simons did know about, on the other hand, was mathematics and quantitative science. At the world-class level. So he was able to evaluate and hire world-class mathematicians and scientists, and the rest is history.
I'm trying to do something similar in my approach to politics. Like many I'm trying to decide between Senator Clinton and Senator Obama. I try to keep up with their speeches and rallies, listen to the talking heads on TV, try to learn their policies and "character," whatever that means. But the truth is, I'm not that clever about politics. What I do know about, however, is investors. So what I find myself doing is looking at who from the world of finance and investing is supporting and raising money for each candidate. I'm talking about the big shots, the people who have had the opportunity to meet the candidates in private, and who pay more attention to the process. Warren Buffett is supporting both, so he's no help. But certain well-known financiers are definitely in one camp or the other. Without getting into my leanings, I notice that the typical rich Clinton supporter is cut from a different cloth than the typical rich Obama supporter. It may not be the deciding factor, but the difference is different enough to matter to me.
This piggybacking idea is relevant to investor due diligence. Many rich individuals and family office principals are not experts in finance or hedge funds. But almost all of them are experts in something, and often at the world-class level, world-class enough to have made them their fortunes in the first place. If you're an expert in a particular business, ask your potential money manager to talk to you about it. If you are a lawyer, figure out if he's a good client of legal services or if he's one of those lunatic clients all lawyers have. Play your game, not theirs.