Yeah, LTCM's head guys like Hildebrand were so full of themselves. Hubris has a way of coming back. I guess if they ventured far afield from their areas of expertise - fixed income arbitrage or relative value plays. They started doing equities stuff like risk arb, and short vol etc. gosh, stick to what you know. but still the vast majority of their losses were still on supposedly safe mean-reverting bond arbs that went really really bad when russia defaulted on their sovereign debt.. too much leverage is never good. too much pride is even worst. trader99
You continue to miss my point.... First: My knowledge of hedge funds is not limited to 'the popular press.' I have friends in the business, I am not exactly a rube with no exposure to the street. Second: I know that there are a lot of successful quantitative strategies and successful funds that employ them. I never said there were not. That point was never in dispute for even a single second. So ths is a complete strawman argument on your part. My point in bringing up LTCM/Niederhoffer is that pride goeth before a fall, there is more to fear from an inflated ego than a humble one, and a degree is no guarantee that the manager knows what they are doing. My MAIN and REPEATED point, for about the fifty fifth time now, is that education and pure trading ability do not necessarily have a positive correlation, okay? a) There are quants that make a lot of money b) MBA types that make a lot of money and c) shorter term (minutes to weeks) directional and/or arbitrage type traders that make a lot of money. While a higher level of education is necessary for A and B, it is not a requirement or even necessarily an advantage for C. Neither of the three paths is "better" than the others in an objective sense, EXCEPT that C is the only path one can take and still be their own boss and avoid the stress and hassle of a large organization, while still having the potential to earn seven figures a year. I do not bust your balls because I think you aren't making money or because I think you don't know how to make money. I never said that. You have your way, I have mine. I bust your balls because you come on this board with a sense of arrogance that is not warranted, and because from responses I've gotten from you in past posts I'm not even sure you believe that option C is possible, which makes me wonder why you are here in the first place. Okay?
Maverick74 wrote:"I'll take the guy trading from his house. Let's see the Harvard Ph.D. who has been taught efficient market theory by the professors who can't hack it in the real world and who has spent years on Wall Street on a sell side desk earning the spread on his trades and passing that off as trading prowess or the hungry little guy that started from scratch and built a full time trading operation with discipline and integrity? I'll take the the guy from Smallville USA trading from his house thank you. That was easy. You have to appreciate a guy that can make great returns in a market where he has no order flow information, inferior technology, has to pay for the spread on all his trades, no inside information, no IB connections and yet he still makes money. I'm sorry but he gets my money. Why? Because he is making money now. And if his fund gets bigger, his technology will get better, his execution costs will get smaller, he'll start to get order flow information as well and his returns will be even better." Yeah, I would tend to agree with you and I've worked on the institutional side. But most of the phds that are employed are not necessarily in finance so they do not necessarily believe in efficient markets theory or whatever. One of my ex-boss got a phd in math from harvard and mit undergrad. so he's not exactly a finance professor so he wouldn't give a sh*t about efficient markets, in fact, i would tend he woudl not believe in efficients why else would he want to go into money mgmt? The small-time traders who do make real returns and an actual living I think are actually pretty amazing. I'm trying to do that and it's hella difficult though not impossible. You wrote,"StatTrader, I hate to point this out, but most Quant funds make very little money. Their returns are earned through leverage. Even LTCM really only made about .05% to 1% return on their trades but they were leveraged 38 to 1 in some cases. They also were putting on their trades at no cost, with no margin, and in many cases they were earning the spreads on their trades. For every successful qaunt out there you show me I'll show you 50 who busted and are now teaching efficient market theory in the universities. If you want to become a great trader, read everything you can, take some money, grab your nutsack, and start trading. Sitting on a trading desk and making coffee for your superiors and fetching the morning paper from him is only going to get you so far. If you really want to make some money, you need to put your own money on the line and grow a pair. Not working order flow and pocketing spreads from large institutions. " Well, it's NOT true that most quant funds make very little money. It all depends on your strategy right? For LTCM, their strategy is fixed income arb, which by definition can't have returns that high(trying to arb between Treasures) will earn you at most 100bp or more at times, but if you leverage it 30x then you got a 30% return. But equity quant funds, where I've worked, our returns are not 50bp leverage 40x! We make real returns because ours is in the equity markets where it's way more volatile. So, don't make a blanket statement about quant funds. It all depends on yoru strategy. But in general, I don't know why stattrader or any institutional guys would have such arrogance. Maybe I'm humble by nature? hmm.. i was class valedictorain in hs, went to an ivy league, worked at IB, then at a large money manager($40B), then at a quant firm $2B and i have no chips on my shoulders.. hehe trader99
again this demonstrates a total ignorance about how most wall st. trading desks operate. trader99 is correct. most trader\quants are from a math or physics background, not econ\finance. and so far as obtaining funding is concerned, the guys holding the purse strings give little value to a daytrading track record based on a capital base of a couple of hundred K. the kid next door may be great at fixing cars, doesn't mean i'd let him near a ferrari. well, apart from the entertainment you give me, i do think someone ought to provide a different perspective. you probably think you're a trading god, sitting in your underwear, placing lots of 5000 shares, but i don't think this is what the original poster had in mind when he said he was interested in working for a hedge fund. there is nothing wrong with being small time, but people should at least be aware of the alternatives. from my perspective, "hedge fund" means Citadel, DE Shaw etc., not a one man band managing $1M raised from his relatives.
vulture, very true in some instances. i was hired by a hedge based on record/knowledge/TA ability. i am not ivy league educated and am mainly self taught concerning the markets. albeit, the fund is very small relatively, but it is a foot in the door, and it is growing. i can not speak for all funds, but the fund i work for was very antiquited technically and strictly fundamentally driven. my daytrading skills and TA has assisted in turning a losing record into a quite succesful one. best, surf
This is one of the funny quirks of needlessly arrogant people. They are thickheaded enough to think that everyone else is as arrogant as they are. And what is this "trading from your bedroom" crap? So I'm in my underwear now? And I guess I have bedhead corkscrews of hair pointing everywhere, bloodshot eyes, pizza stains on my wifebeater t-shirt, a stream of yoohoo trickling down my mouth, cartoon network playing in the background...and I guess I don't know anyone with money, either. I'm hitting up my Uncle Jeb who owns a spare parts garage for funds. You are stupid, my friend. Every additional post further reveals the thickness of your skull. You are beaten down with logic, and every time you pop back up like one of those idiotic inflatable clowns, just to get smacked down again. All your ego garbage has replaced the space in your head reserved for common sense. My grandmother has more street smarts than you. Are you intentionally trying to make yourself look like a fool with all these softballs you are lobbing me? I've put my foot up your ass so many times my shoe is starting to smell funny. Every time you make some lame comment about "trading from my bedroom" or "smallville USA" you show me that you are in love with hype and substance is more real to you than results. A suit and tie does not make you a professional. I could put on a three piece suit and designer shoes every morning if I felt like it. I could shell out $1500 a month for a high tech office with a modern architectural design, state of the art blinds and a plexiglass door. Would it make me a better trader? Not a bit. Would it impress jerkoffs who are too stupid to pay attention to what's important and more interested in what looks good? You bet. Show me a guy who is more impressed by the straightness of a guy's teeth than the words that come out of it, or the way his offices look than the results of his activity, and I will show you a Dumbass with a capital D. I have news for you. The only reason I'm not a big boy yet is because I haven't decided if I want it. I'm happy moving fast as lightning and living the lifestyle I want in one of the most beautiful places in the country. My wife and I are looking for property, eventually we want a twenty acre spread so she can train and breed horses. You think I could do that in Manhattan, moron? Sure I'm small right now, but that's only because I like being small. (Oh and I'm still big enough that my total pay over the next 5 years will dwarf yours, by the way, I'd bet my last dollar on it.) I've got what it takes to make it on any playing field, no matter how tough. And if I want to get bigger, I can hire some math geeks any time I want. I got to where I am through sheer force of guts, determination and will, and if I ever want to run a billion instead of a few million, you know what? I'll be able to. I have no doubt of it. By my posts on this site compared to yours, anyone can see I have more marketing and communication skills in my little finger than you have in your whole body. And despite your desperate wish to believe I just fell off the turnip truck, I know a fair number of guys with a nine figure net worth. So you see, stat, the only reason I haven't invaded your turf and kicked your ass there too is because I haven't decided whether I want it or not yet. It's just a question of whether I want to hassle with it. Because you see, there are things in life more important than prestige or a plexiglass door.
LOL and i'm sure Elvis is sitting right next to you, and pigs are flying outside your window. you're a legend in your own mind.... i'm sure uncle jeb is very proud of you.