I've found a strategy that seems to work really well. I've been trading it for the past year with excellent results (about 40% return, 10% max drawdown) and it also works well in all the backtests that I've done. It's a mostly passive strategy, following just a few simple rules, holding 3-4 positions for about 6 months at a time on average. I feel like it would work well for other investors but I'm not sure what form would be best. I thought of starting a mutual fund, but I don't think I have enough capital or the reputation for that. I thought of prop trading, but that seems mostly oriented towards day traders. I thought of doing a 'friends and family' investment advisor account, but I don't know anyone personally that could or would want to invest enough to be worthwhile. Am I missing something obvious? I feel like I have a strategy that crushes any mainstream mutual fund/etf, but there's no way for me to offer it to regular investors.
Yeah, the part you are missing is that your system has only been exposed to a raging bull market in the past year. How would your results change if the slope of price change over the past year was in the opposite direction? How would you manage those losses? What would your investors think or do when they discover that your long positions are all a bunch of losers? Better yet, what would YOU think or do in that scenario? These are just a couple of the things you need to ponder before you start managing other people's money in any way.
Very good point Baron. You can see this dynamic play out on the leaderboard at fundseeder.com. Virtually all the very top performing accounts trade equities predominantly and holding periods are much more than just a few days. The Sharpe ratio of some index funds the past year is > 3 too. Brains or a bull market?
This is fantastic ! So I am not alone. I have discovered something very similar. I was thinking there is maybe something wrong with my strategy, because it is almost too good to be true. But I have created a genius system that already made me some money, so I really think now it is time that I manage some other peeples money and start my own investment fund company, ok ? It seems my edge in the market is so strong, I can even tell you the system, it wont hurt my performance. Ok so listen, this is it: Every monday morning, I buy shares of GOOG, FB, NFLX and AMZN. And then, and this is the important part, I sell them again on friday afternoon, ok ? The following monday I just start buying again. Monday buy, friday sell, rinse and repeat. You got it ? Got it ! This system is robust as shit, I have backtested it 1 year and even 5 years, ok ? I know it seems too good to be true but it is true. Ok guys, now that I gave you so much help, you can maybe help me with a name for the investment fund that I will set up for this system... be creative, be like water, and give me a supercool name for my system and the fund that I will set up, you know I am great with maths, but not so good with marketing, ok ? Wish you all a damn good day, yeah, and probably see you all soon in Monaco ! Ok ?
trading is 70% mind, 20% money management, 10% technical. Unfortunately you only cover 10% of trading. You still got 90% more to go and this 90% involves real $$$, real emotion.
OP said his holding period is six months. that doesn't fit most definitions of trading. as to your definition of trading, my experience has shown money management deserves a much higher percentage.
I think I have a winning strategy. What can I do with it? Sell it to MarketSurfer. He's really desperate!!
Mortgage your house and double your money in a couple years, repeat and let it compound. Then retire ...