Aaron chat

Discussion in 'Professional Trading' started by praetorian2, Mar 27, 2003.

  1. Aaron- Great chat yesterday. I didn't get a chance to ask one last question. You mentioned a few sites that showed hedge fund rankings. Do you know of any others. A few like Barclaysgrp.com didn't seem to work.

    I wanted to post my fund results, but was wondering if there are any legal rules that you know of? Wouldn't this go under advertising? I know that everyone else does it, but are you sure it is legal.

    What do these sites want in return for allowing you to post on them? Are there fees, or do you have to pay a % of the money referred to you, or is it free?

    Which have you posted your results on, and what type of feedback if any has that generated?

    Thanx in advance.
  2. I agree. Great chat and thanks for the helpful advice.

    Regarding your question, I was about to post myself on Cogenthedge.com also, but changed my mind. I've already got a few close family and friends investors in my fund and I figure I actually want to keep it that way.

    I basically figured that the people those sites attracted would be strangers to me anyways and I didn't want that hassle. Even if it attracts some money I didn't think it was worth it in the end.
  3. Yup. You can build a pretty big fund with people you know and trust and who will stick with you for years. One bozo decided he wanted to call us and the accountants every day - we cashed him out immediately. We stayed away from all the third party marketers and listing services, and it's been just great (from 200K in 08/00 to 6.6M). Strictly WOM.

  4. Impressive growth!!!

    Thanx for the insight. My accountant is asking the fund lawyer and I should hear back in a few days. I will post any legal advice on this thread, but I'm 95% sure that it is all legit.

    I was about to post on cogent hedge as well.

    Disciplinedhedg- I have a number of friends/family already in the fund. Thing is, I am sort of trying to avoid the issue a lot with those not in the fund. I would much rather have nameless entities in the fund (funds of funds, brokers, insurance, endowments). I doubt that I will loose money, but I don't know how I could face my friends and family if I did. Have you faced similar feelings, or have you overcome them? Did it ever bother you?

    Poundtherock- Good point. I am quite fearful that I will have someone looking over my shoulder. Trading is enough of a hassle. I don't need someone checking up on me daily.

    I trade a lot of illiquid issues, and as a result, I don't disclose much about positions and trade tactics. I would hate to have someone bothering me or my accountants for that information.

    If you 2 have never used those sites, do you know of anyone who has, and their experiences?

    I am pretty eager to grow the fund at least to the point where it is breakeven on a monthly basis. Unfortunately, my friends and family are not wealthy, and I want to keep it out of the family sort of. I would like to know how you get introduced to fund of funds or other institutional investors. Do you have any experience?

    BTW: Baron + Andre, this was a great chat. You should set up a lot more of these in the future.
  5. I've thought about how I could face my partners with a loss. The thing I figured was that if you can face it, they should be able to also because they should be on the same page (understand the risk, your possible drawdown, etc.). All these things need to be clear to both you and your silent investors. If they are not, figure out why not (do they want daily statements, always want to talk to you, etc). Then you will all be comfortable with what you are all doing.

    When you say "I doubt that I will lose money" that scares me, and if I was a partner and I heard you say that I would have second thoughts.

    Also, like Aaron says which I don't think many people realize is that most of your profits will come from your personal portfolio. Many times the risk of trading other peoples assets is not worth it unless you don't give a damn their money. Think about it - to make $100,000 on average hedge fund pay, you would need to profit $500,000 (20% is yours). Let's say you are able to get a sum of $1M in your fund. That's a 50% return. Your fund must be fairly risky to be returning 50% so it's possible you may blow that $1M of your friends and family. To me $100,000 is not worth it unless I am completely sure they understand the risk and are able to lose it. I wouldn't know this unless they were close friends and family that I could reference. If an "outside investor" ever took a hit there's risk they would keep calling you and haunt you continuously with their lawyer.

    People should never be in a hurry to start a fund and risk other peoples money I think. It shouldn't be about accumulating more money to trade with, but instead about helping others trade because you are completely comfortable about your own trading returns.

    Besides, word of mouth might be the most powerful and stable way to grow your fund.
  6. Babak


    What are you guys doing discussing this topic? Don has spoken!


  7. hi,

    don is totally correct on this issue. these "funds" being discussed should be refered to as "micro funds" not hedge funds. let's see, someone stated their fund is now 6 million and the chat host yesterday stated he has 1.5 million in his fund including his own capital. we will take the larger amount--standard management fee--1%. that would be 60k per year, standard performance fee ( subject to high water mark of course) 20% of profits. THEN you subtract auditing fees, accounting fees, etc. . any way you cut it, it is a stupid structure to manage money if you are less than 10 million.

    furthermore, these so called funds that use the supposed " up to 35 investors can be non accredited rule" to solicit tiny amounts of capital are plain and simple playing with fire.

    the structure was designed to manage significant amounts of capital. Ego gratification is the only benefit to the structure at low amounts.


  8. OK, I believe that this might a right thread to ask this question: why do some people start hedge funds?

    Could those who have already done that share their thoughts on this, please?

  9. cartm


    WOW. I am really pissed I missed that chat, just read the logs. I have a few questions that I would have asked if I was able to participate.

    1. Why a CTA, why not register as a CPO?
    2. Does the fact that you wrote much of your own sub docs/ppm etc turn off prospective clients? (Institutions)
    3. I have been meaning to try ffastrade, but have been unable to bc of personal reasons lately, what is your opinion of it, in contrast to TT's X. How stable is it? I like the X depth trader, can you compare it to ffastfill, eventually I will just have to try it myself to know for sure, but am just asking your opinion. Is the lite version of ffastrade somewhat equal to the full?
    4. Have you considered or thought of taking down your risk/reward ratio, that is, sacrifice the 95% return in return for lower dd's?
    5. I saw the sharpe ratio mentioned a few times, but not the sterling? Do you use the sterling, does anyone use the sterling, I thought Sharpe was predominately used for equities.
    6. You said you are sys, do you ever trade dis? Have you ever?
    7. You mentioned the 3 instruments you trade, what other ones are you looking at to possibly trade in the future? Mini dow, E50, SSF'S?
    I have a few more but am going to reread it later, thank you for sharing your thoughts, experiences with everyone on ET.
  10. They should just call these "micro" funds "family and friend" funds, as I suspect most of the money is from family members and friends.

    Oh well, you have to start somewhere, right?

    Financial nepotism rules.
    #10     Mar 28, 2003