Yeah, the greed factor kicks in and they think it can just "keep going up" ... those emotions again. I seriously hope you guys don't let some minor little BS like this get in the way of your relationship ..., ain't enough money for that in the whole wide world. Later, JJ
That's exactly what happened. I would suggest he get rid of a few positions and he would ask me, "Why? Why don't I get rid of them when they start losing?" I tried to explain to him the need for a plan and that's it's ok to take profits and plus...the future didn't look good anyways but, he didn't listen. 3 weeks later he would call me up yelling like he used to do at his old broker. Yelling about why we didn't sell a month ago. This happened several times. There are far more/deeper problems that happened a long time ago that hurt our relationship. I appreciate your concern.
You are better off not getting into this situation. The BS is not worth the reward of managing OPM, especially friends. I did this a long time ago and people do not listen and still make irrational decisions even when they are not calling the shots.
40% of profits.....if your system has a proven track record of a minimum of 6 months. In your case I would not touch his money....there is very minimal potential gain for you....just hassles.
How is it different than someone come over to me and say, I will give you tips on XYZ, if you make money on it, I want a cut. If you lose, it's not my responsibility.
Brings back memories and again underscores the hassles involved with OPM, and without solid contracts. I was trading 1.5 million for a "friend". After 6 months, I had him up 16%, with a flat S&P. Then he gets involved in looking at his trades each day. Bad news. Always happens. He called one morning upset wiith me that I had sold one of his stocks at a loss. (It was down .25 and not going anywhere.) He couldn't figure out why anything should be sold at a loss. That was the last trade I made in his account. There are two bad things that can happen when trading for friends. (1) You make money, (2) You lose money.
Haha, funny this came up. One of the 3 friends wanted me to invest money for his roommate. But I turned the offer down as I did not know the roommate. I am not sure why previous posters are so against managing money for good friends: I chose to only manage money for friends (and not random clients) because I get a higher sense of satisfaction making money for people I care about. When you invest for friends, they have faith in you. I lost a large chunk of profits and they did not even bat an eye, and now I have recovered. Others pointed out that if you lose their money, the friendship might sour. Well, that is easily solved, just guarantee their initial investment. That is what I did, and now that I have made money for them, they calmly accept any drawdown from the equity peak as just playing with house money: they are still up net-net.