I still remember the early interviews where The Sos said he would see her trades come in over the TOS platform and be amazed at the amount of risk. That and Karen talking about the airline ticket to Mexico she had when the market took a drop and she had to roll to ride it out. I think she truly believed that the probabilities would work themselves out and that the performance fee was her salary as she navigated through this market. The problem is that her leverage didn't allow enough room for the irrationality that exists in the market.
Apparently she was fined for $100,000 last year for irregularities. So the SEC likely has had their eyes on her for awhile https://www.thestreet.com/story/135...ing-strategy-relied-on-fraud-sec-alleges.html
Guys, there is an absolute correlation between risk and return. I've beat this drum so much on ET that I'm exhausted talking about it. For every basis pt above an index return you are seeking, that marginal basis pt comes with a marginal unit of risk. There is ABSOLUTELY no way around this no matter how you slice it. You can sell all the premo you want and talk about your risk management skills, but in the end, those extra returns are coming from added risk and leverage, not the magic of theta. It's absolutely shocking to me how many otherwise intelligent people simply don't understand this. But there is this crowd of people on ET that use phrases like "all I want to do is make 10% a month" doing this or that. It's laughable. These people have no effing clue how to derive the math to get those returns and they act as if they are making a personal sacrifice from shooting for 30% a month to a rather modest only 10% a month. The mind of a retail trader....
But she was supposed to be a SuperTrader init. The normal risk/return rules do not apply to SuperTraders. Like Soros who made $1billion on one trade, or like richard dennis who turned $200 into $200million.
They apply to EVERYONE including Soros. Soros has NEVER EVER EVER claimed his returns came from without risk, in fact he has stated exactly the opposite. He has taken enormous risks in his life and if you read his book "The Alchemy of Finance" where you can read in detail his journal where he outlines all his trades over a 2 or 3 year period, you will see just exactly how much risk he took.
There are 3 interesting quotes in that violation, the correct link here: http://www.cftc.gov/PressRoom/PressReleases/pr7153-15 " According to the Order, no customers were injured by any of the previous omissions." Then everything is great! I guess the SEC begs to differ. "These provisions ensure that persons dealing in commodities meet certain minimum financial and fitness requirements" Anybody knows what exactly the fitness requirements are? Like 20 push ups in 30 seconds or something? Maybe it is as simple as not to die in the next 6 months... Oh, here is the kicker: "The Order also states that as of August 2013, HAL began issuing two monthly reports to HIL participants, one showing realized gains/losses, and a second based on net asset value showing realized and unrealized gains and losses that complies with the specific Commission reporting regulations. " So after 2013 Aug when there were still no large losses yet (what we know about) the investors KNEW about the unrealized losses, they probably just didn't understand it. Otherwise knowing the unrealized loss and the "last man standing holds the turdbag" stipulation, they should have ran towards redemption...
Interesting how they padded the realized profit column with the option premiums collected - and of course the unrealized loss column would keep getting bigger. On ET that is known as trade adjustment. For the fund to collect its monthly fees it had to show a profit - and they used the realized profit to calculate the profit. To Joe Investor the realized p/l column was probably more important than the unrealized p/l column.
Then, how did he get away from being wiped out if he took so much risks and how I can learn form him and you? Thanks.
Does that mean us average/small retail traders are doomed to make very modest return even if we try hard?
I still don't quite understand exactly how she did her accounting of profits and losses. Can some of you explain?