Magnum, Your financial advisor is a salesman first and foremost. I understand that you aren't comfortable managing all of your investment/trading capital, and I think a financial advisor who offers low fees while helping you to determine and achieve investment objectives via passive portfolio allocation is reasonable. Under no circumstances should you consider your financial advisor a trader or active portfolio manager and as such do not let him do things that these people would. If he is your run of the mill broker, the extent of his knowledge on hedge funds and the strategies they are running is limited to what is written in the Journal, what he heard on CNBC, or what colleagues, that have a friend of a friend who worked in the back office reconciling trades of a high frequency quant fund, told him. If you are interested in active trading/investing, you'll need to tackle this by yourself. If you aren't looking to devote countless hours and money to learning though(and even if you are!), it probably isn't worth it. You'll do best by learning the ins and outs of passive allocation. To address your original question, the hedge fund universe is enormous. The general public has referred to strategies as "advanced" or "complex" when in reality this may just refer to the fact that hedge funds short stocks in addition to being long, unlike long-only mutual funds. This is not complex at all. I believe long/short equity hedge funds are the most common type of fund currently, but I may be mistaken. There are other fundamentally and macro driven strategies I'll leave out for now. Quantitative funds are growing rapidly, but many of them are running very simple strategies based on some BARRA factors or other fundamental data that can be mined, backtested, and optimized. Again, this is made to sound complex, but the core is not at all. Some are running extremely high-frequency trades, but my current understanding is that the most successful systems doing this are running extremely simple market making strategies, capitalizing on economies of scale(low commissions) and powerful technology(you know supercomputers, fiber connections, etc). Others may be trend following, using programmed rules defined by technical/statistical analysis. And then there's always chatter about funds doing wild stuff, speculation about the use of artificial intelligence, genetic algorithms, crazy maths for pricing models, etc. But if we are making generalized statements, then I think it's fair to say that most strategies are simple.
Yall are jumping to a lot of conclusions. I know what the financial advisors are about. After just trading for 2 years im not gonna run that sum of money myself. I have averaged about 8% a year so far so its better than a bank account. And no he didn't involve me in any cdo's or anything like that. its just a little better than a bank. And I know this guy isn't a trader. Im just not a guy that has access to many of the big firm people and I like knowing someone that is familar with that atmosphere to talk with at times. knowing something simple like how a big firm like ubs places orders to me could be valuable someday. I just like knowing exactly how things work. doesn't mean i believe im dealing with a top trader and since I don't know any hedge fund guys I was curious as to the general complexity of there operations, i asked him and got an answer that seemed a little ill informed so I came on here to see what y'all thought. I'm pretty much self taught with what I have learned so far. I'm taking in all the info I can get from wherever I can get it. And honestly with how safe my portfolio is with them i have no fear of it blowing up. safety was a ig factor going in. When I'm ready I'll take control and run the money myself. until I feel comfortable it'll stay with them...
You should read the fine print. In no way, shape or form will ANY firm guarantee or promise safety of your money. They will talk the talk, but the reality is that your money is not any safer with some standard big firm financial advisor than you doing it yourself. Understand this much. At any big firm, the financial advisors push products that are chosen based on how much money they make the firm, not whether they are suitable & profitable for you. 8% a year does not even beat inflation.
Yes, most financial advisors are worthless, but not all. The advantage of using a true (usually "independent") financial advisor/CFP is that they stay current on new tax laws, insurance and investment strategies and can help you minimize the amount you lose to taxes on your estate/total portfolio. The good ones will work for "fee only" and receive absolutely no compensation or kick-backs for the products they advise you to take, since they are being paid only for their financial "advice" and not for "selling" products, especially insurance products. This means you won't usually find a true financial "advisor" working at places like UBS, Bear Sterns, Morgan Stanley, etc. because there's pressure for them to sell a product line that will pay them a kick-back/commission. Instead, most true financial advisors usually work at an independent, "fee only" type of firm.
how can anyone make an assumption like that... "if its a complex strategy it wont work" you have no idea of what the strategy is about, nor do you know how every complex strategy performs. and consider this: simple systems are alot easier to come by, therefore if you do manage to find a good one, it wont be long until everyone else finds it and starts trading it too. and that will eventually kill the system. complex systems are often coded so that they continually adapt to the present market. and you wont get as many people come across them imo, so there's probaly a better chance of them lasting longer.
Because everyone on ET is a millionaire and have vast experience with trading systems and trading in general. Didn't you know? âI consider myself an average man, except in the fact that I consider myself an average manâ - Michel de Montaigne nitro