So you are ready to hand your money over to a "hedge fund"...

Discussion in 'Professional Trading' started by retaildaytrader, Dec 1, 2010.

Before handing it over, would you want to see a verification of returns?

  1. Yes, I would want to see at least a years worth of returns?

    1 vote(s)
  2. Yes, I would want to see at least three years of returns?

    4 vote(s)
  3. Yes, I want to see at least five years of returns?

    10 vote(s)
  4. Yes, I want to see ALL of this person's trading history.

    7 vote(s)
  5. No, I would not request to see that person's returns or trading history.

    3 vote(s)
  1. So you are ready to hand over the cash to a "hedge fund", would you want to see some type of verification of returns such as a statement audited by a third party, tax returns, etc...

    Vote in the poll...
  2. PaulRon


    No one in their right mind would give you any money.
  3. Pekelo


    I am a trusting kind of guy, your word would be enough....
  4. That is interesting that you would come to a conclusion based on some typed words on an artificial screen. You have concluded that you would not give me any money because of some words on an artificial screen. Does that mean if I typed the right words on the screen that you would give me money?

    I would not make any conclusions without seeing ALL of a person's ACTUAL trading history. Words on a message board are just words...its just talk. Most people use this message board for entertainment anyway.

    Personally, before I gave anyone one dime then I would want to see their entire trading history along with a biography that I could independently confirm.
  5. You don't have any money to give, so really, it matters none what your methodology would be. It's quite obvious that you generally clueless about the hedge fund industry, as well as trading.

    That aside, it's probably more important to know the method & edge that the hedge fund is utilizing rather than see years upon years of a record. Historical results do not at all guarantee any future performance. Plenty of generic hedge funds post 3-5 years worth of track records just to blow out or have big drawdowns in the upcoming years.
  6. Nicely said, hydro. This person is likely 12 posting from the detention center.

    It's truly sad to see what elite us attracting presently.
  7. the1


    Instead of voting in the poll I'd like to briefly share my experience starting a hedge fund. I traded within a circle of traders, some of whom were very competent traders and some who weren't. I told them I was starting a hedge fund and showed them my brokerage statements, along with the forward knowledge that I had a clue what I was doing. In addition to this, I invited some friends and family to join the venture -- some accepted, some declined. I started as an exempt fund, under 400k and 15 people trading strictly 1256 contracts. No one asked for an audit on performance. Had someone asked I would have politely told them no and they now have the choice to invest or not invest. After a year of operation I had an independent accounting firm audit my returns and from that point I was able to attract more investors but I was able to start the fund without an attorney or an accountant. The combination for both during the first year would have cost somewhere in the neighborhood of $40,000. No way I could afford that as an exempt fund.

    Long story short, you can start a hedge fund and bypass the "traditional" ways of entry but you have to get creative. Down the road I closed the fund -- not because it was performing poorly -- because it was taking up just about every waking moment of my life. I converted from a CPO to a CTA and now my work load has been cut in 1/2. Managing money is a whole different world when you never actually touch the money. You actually get your life back.

    Since closing my fund I have helped others start a fund in the exact way I started mine. The costs of entry are extremely high but there are other options. You just have to get creative and you have to figure out a way to get people to trust you. Honesty goes a long way in that regard. If an investor asks, "what happened in that drawdown period," tell the truth. You'll earn their respect for that because everyone goes through periods like that.

  8. the1


    Agree 100%. The biggest question I received from educated people with knowledge of the industry and trading in general was, what is your strategy? They didn't care very much that last year I did 48%. They wanted to know precise details and examined drawdown periods very carefully. You'll run into two types of folks when you try to attract capital -- those who know very little about the industry and who are quick to stroke a check and those who tend to know more about the industry than you do. You need to have two presentations ready. A highly complex and sophisticated presentation and then one that's dumbed down. A Sharpe Ratio and Sortino Ratio doesn't mean anything to the average investor but means everything to the sophisticated investor. You even need to know the weaknesses of each of these ratios and be ready to discuss them and how they apply to your trading/strategy. You need to know what a Black Swan event is and what steps you've taken to ensure you don't run into one. What if that risk avoidance method fails? On that 1000 point intra-day down day many of those risk management methods did fail. There are times a stop is useless.

  9. Fractal


    Hate to break it to you dude, but you're not even independent trader material. You'd be a very dangerous manager of OPM.

    I think you have to go through enough difficulty where you learn not just the value, but the utility, of being humble vis a vis the market and others. And you've gotta get over this need to prove yourself.

    You'll get the confidence you seek by trading and testing the system you've developed for yourself. Quit trying to convince people to throw money at you so that you can be the big shot you've dreamed about.
  10. Let me make a clarification in this post. I did not mean "audited" statements which would involve an accountant, lots of time and a process. What I mean was to check some type of statement like a brokerage record, an online website, tax returns, etc...some type of paperwork that would demonstrate the individual's record.

    Here is my point. You see people in this thread making broad based assumptions on myself, but do you know who I am? Am I really an 80 year old retiree from the oil industry? Maybe I am a 16 year old high school student or a 32 year old guy in Michigan bored in the office...maybe I am a female. Maybe I am Baron playing some type of intricate game to fool you guys. You see, you think you know, but only I know the real answer to the questions and you guys just go by what you read. Therefore, I believe some of you guys would be easily conned by a smooth illusion.

    There are times I go to the casino and sometimes see a show with an illusionist. He cuts women in half, makes objects disappear and things levitate in the air. It all looks real and, if I did not know any better, then I might believe it is real.

    So my point is that how do you know who you are really dealing with if you don't make some attempt at verification? All you know is what the guy has told you or showed you? Most of you seem to make assumptions so I think most of you would be fooled. You could be dealing with a criminal for all you know.
    #10     Dec 2, 2010