Smoker
Registered: Jul 2006
Posts: 61 |
07-20-12 08:53 AM
Hi Ghost of Cutten,
Quote from Ghost of Cutten:
It's not a free call option - you have to be employed and sit at a desk following orders, either from your boss or your clients.
Sorry I guess I wasn’t clear on what you would be doing either your own or at someone else’s hedge fund if you institutionalized yourself to pass due diligence to be able to trade outside money.
What I meant to say is you would be hired to run your own strategies rather than do some other job such as execution, operations etc.
Your boss or client hires or allocates to you because your trading profile complements their existing portfolio of trading profiles. Thus they want you to trade the way you trade and replicate your past profile going into the future.
If they wanted someone to do things they way they currently do things then they wouldn’t have hired you.
For example when I made the jump from Merc/interbank options market making to a hedge fund/CTA the principle specifically hired me because my trading profile from interbank market making and floor scalper was very different from his traditional long term trend following.
He didn’t tell me how to trade because he doesn’t want me to trade like he does and the same goes for the clients.
I do stress that the clients were part of the professional asset allocating community and not hot money performance chasers (amateur hour) etc.
In fact my current employer was that hedge fund, which first hired me, biggest client. When I decided to leave London (personal issues) I called up the client and told them I was going to leave and would be in touch after setting up. They said you have traded for us indirectly for years what about getting out of the rain and coming to the sunshine and working directly for us.
So I didn’t even need to do a formal interview since I had met them in London several times during their due diligence visits and they had intimate knowledge of my performance since it was primarily their money in my program at the hedge fund.
Both here and at the London based hedge fund no boss or client has ever told me to how to trade because they hire me to get exposure to my profile.
They are not interested ordering you around to clone themselves because they already have exposure to their own profile.
Quote from Ghost of Cutten:
so I can handle 1, 2, or even 3 down years, something that would career-kill any hedge fund manager or trader.
Actually this is not as true as you might think. Maybe for the hot money performance chasers that is run pretty amateurish but definitely not so for the real pro asset allocators.
The biggest single fear a professional asset allocator has is after he makes an allocation based on an individual trader/hedge fund profile that fits nicely with his other allocations the trader hits a rough patch. The horror is the guy in a rough patch will at best style drift and at worst figure he is about to get shut down so will roll the dice on what he sees as an “all or nothing” situation.
The best asset allocator I ever met told me he spends most of his time hand holding scared traders in a rough drawdown that are freaking out that he might pull the money so he has to keep convincing them to just keep it together and keep doing what they did to get the allocation in the first place.
Oh and the other one big nightmare is a discretionary trader that is either getting a divorce or building a house. For some reason having a baby appears to help focus discretionary traders and they generally get better.
Quote from Ghost of Cutten:
There have been quite a few solo traders much bigger than the ones you mentioned. E.g. Robert Wilson, Joe Lewis, both made >1 billion and didn't work at a hedge fund or run client money.
I don’t know about quite a few but instead I view those guys you named as really special rather than typical.
Besides didn’t one on them come out of the US Investment Bank industry and the other sold a very successful business so started out in trading with quite a stake?
And also if I am not mistaken one had a big direct allocation from Quantum? Actually that kind of allocation happens quite a bit in the industry where hedge funds themselves will allocate some of their assets under management to an outside individual trader.
Quote from Ghost of Cutten:
Besides, there is really no point in making wealth above a few million, anything that costs that much is a useless material bauble, and you cut yourself off from the majority of society if you become seriously wealthy. There is a reason the best parties and the most fun people are never in the richest parts of town.
Of course I agree. Whether it is the parties of which you speak or the guy that just really loves his hardware store I would never advise someone to do something that would bring them unhappiness.
Quote from Ghost of Cutten:
Not true - liquidity constraints often make small-trader track records irrelevant for institutional size.
Agreed but it’s not really a factor because it is only if your methodology can handle size that you have the opportunity of the free call of which I speak.
That said you might have a more scalable method than you realize. I have a Serbian kid beside me that is a high frequency trader and both of us have played around a bit and taken some of my regular stuff and are now using it to trade high frequency.
It is kind of ironic because years ago when I left interbank market making and the Merc floor my focus was short term day trading/scalping/jobbing etc and I made the jump to money management because my stuff complemented the principles trading style at the above hedge fund.
Back then with the principle’s help I stretched out my short term stuff out and most of it still worked in the longer term. Now in the last several years I have taken both my longer and shorter term stuff and with the Serbian kid’s help really squeezed it down to high frequency.
Just realized what a ramble this is turning into so all I wanted to say is you never know what can be done with your current stuff. The Serbian kid taught this old dog a few new tricks and it all helps.
All the best!
Warmest Regards, Smoker
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I tried to find his name and the articles back but I can't find it anymore.
