Should I invest this?

Discussion in 'Professional Trading' started by tonyzhou, May 20, 2012.

  1. A friend send me his personal performance, up +200% since 2008 and now have 400K and ask me if I want to invest 100K. What do you think? Any comments are welcome.
    • per.jpg
      File size:
      19.5 KB
  2. Peak equity was 2 years ago. I say no.
    You should probably know what kind of strategies he's employing and how much leverage he's using, if any. Consistent returns can mask high risk if, for example, it's a strategy based on selling far OTM options only to see a tail risk wipe out all the equity.
  3. He hasn't made money in over two years.

    Not necessarily an auto-reject, but it would be a good idea to understand why, exactly. It looks like he's (poorly) trying to catch long-term bull trends in one of the indexes - the charts certainly line up well with what you posted.
  4. I guess that depends...are you still going to be friends when your 100k is 50k in less than 3 months, not once, but twice in two years?
  5. a friend? Thats just nuts.
  6. Probably not. Things were easier for many trading styles back in 2008-2009 vs. the last couple of years and it looks like he's still trying to figure out how to adapt to the current kind of market.
  7. jj90


    I would like to ask the posters so far 2 things about their responses:
    1)Have you made those types of % returns compared to the trader in the OP's post?

    2)Have you made the absolute sum of money that the trader has in the OP's post?

    I'm giving ET the benefit of the doubt here and that my point is being seen. You certainly can share if you want though.

    And also, if trading P&L curve is the equivalent of trading synthetic stock, then that P&L chart by no means is horrendous.
  8. heech


    I'm up about 150% in that time frame, and with a much larger account size. I have no idea what your point is.

    That equity curve is horrendous. He's up 200% since 2008, or you could say hes down 50% since 2010. Wouldn't touch that deal with a 10000-ft pole.
  9. jj90


    Performance like everything else is relative. I know you are one of the few legit guys here heech, so you can certainly start the big dick competition. However, my point as you will notice is addressed at those who may not be at quite at the same level, or at least that I don't know of. If you haven't accomplished something at least equivalent to the guy mentioned in the OP's post, you are unqualified to be saying yes or no.

    Also to play devil's advocate, how does one know that the individual mentioned in the OP's post isn't about to have his P&L breakout to the upside? In fact, how do you know you aren't about to hit your max DD or blowup?
  10. heech


    Well, now I kinda feel bad... I don't usually like big swinging dick competitions, and I try not to brag/participate in any such thing. So, that's not my intent here. This is especially because I'm realistic enough to say, in fact, there but for the grace of God go I... anything could happen tomorrow, including a big DD.

    But coming back on topic... I have a hard time accepting the original manager in question has actually "accomplished" anything. Being up 400% in 2 years (or 200% in 4 years) is, in and of itself, not necessarily impressive. I've been up 1000% in a single night playing craps, and I wouldn't expect ANYONE to be impressed or envious of that performance... it was just a matter of luck.

    On a risk adjusted basis (just eye-balling the chart), this guy is not doing well. He's taken huge risks, and it works out for him sometimes, and it doesn't work out at other times. On risk adjusted basis, I seriously doubt he's even doing better than a random stock picker.

    I'd like to believe that I'm *not* taking the same risks in my strategy, and I'm certainly proud that my risk-adjusted returns are substantially better (so far). But, if I happened to reach max DD tomorrow and stare at a 50% drop in NAV (*always* a possibility)... I can assure you I absolutely wouldn't be out there trying to raise money with that record. Frankly, I'd be too embarrassed. (And I certainly wouldn't want my "friends" investing, for that matter.)
    #10     May 21, 2012