I know it's hard for some people to believe, but all I try to do is offer alternatives and suggestions. Bob and I have been on most sides of the business, including searching the best way to make money, being a "customer" of SLK/GS since 1978/79, and members of many exchanges over the years. BT basically grew out of a desire for economies of scale with our negotiations with SLK. I have counseled many potential traders to "possibly consider another line of work" - it doesn't do us or them any good to come in and lose money. And, yes, we even have hedge funds under our wing. Thanks for everything, Don
Which I think is one of the better situations. All the benefits of trading with a JBO, and not having to assume the personal risk of overleveraging.
"I have determined my dealer/broker as Scottrade Advisor, but find the choice of my porfolio accounting software a difficult one." I highly suspect this was posted by a troll. I dont have any experience with Scottrade, but its hard for me to take them seriously when I see all these advertisements on CNBC along with investools and Gorilla trades. I kind of dismissed the Scottrader as another Ameritrade or other similiar online gimmicky brokerage. Maybe the Scottrade program is a good one and Im just dismissing them prematurely, I dont know. It doesnt sound like a serious enough program for handling large accounts. The poster also has just one post and recently registered too. I have read Don Brights post. His posts are indeed very well written and insightful. However, you have to remember that Don and Maverick are not traders in the truest sense of the word, but businessmen/salesmen who offer services to traders like prop trading, etc. This doesnt make either Don or Maverick bad guys per say. They do have decades of industry experience and what they have to say seems very well thought out versus some of my posts where I just throw them up on the fly without thinking or proofreading. Hehe. Don or Maverick are definately valuable members to this board and provide insightful information. As to the original post, a guy running a hedge fund on the Scottrader? It seems a little wacky and it was probably made by a troll.
Having a hedge fund administrator for your fund is extremely important in todayâs constantly changing hedge fund environment. A hedge fund administrator does not manage your portfolios, trade or research, develop products, raise capital, or manage client relationships. These functions are the core functions of your business that tend to be out-sourced infrequently. A hedge fund administrator services your clients and investors; supports you administratively and operationally; and provides you financial, tax and compliance reporting. This includes audits and tax coordination; compliance services such as anti-money laundering and know-your-client procedures required by the Patriot Act, and middle office services. These functions are critical to the successful daily operation of your fund and investment adviser. When administrating their own fund, many fund managers find they are in over their head. In-sourcing requires you to hire sufficient support staff with the necessary skills and experience, pay their salaries and benefits, provide necessary infrastructure (office space, hardware and software), and supervise their work. In-sourcing also makes you directly responsible for correct and timely performance of these duties and compliance with all rules, regulations, and laws, especially the recently enacted anti-money laundering and know-your-client laws. The other choice would be to simply outsource these functions and have your fund pay a hedge fund administrator for all administrative and operational support. Out-sourcing requires the hedge fund administrator to provide necessary staff, infrastructure and supervision of the work performed. You can contract with a hedge fund administrator for correct and timely performance of these duties, and compliance with all applicable rules, regulations, and laws. A wide variety of service providers exist for your fund and investment adviser. Most service providers fall into two broad categories: fund accounting or fund administration. Fund accounting provides you with financial or GAAP reporting, some tax reporting for your fund, and occasionally compliance reporting, typically billed on a time, materials and systems usage basis. Fund accounting is only a reporting service. You will still be required to perform most administrative, operational and client servicing functions for your fund. Fund Administration provides you with client servicing, administration, and accounting for your fund, typically billed on an asset-based fee basis subject to monthly minimums. hedge fund administrators vary widely in the amount and type of client servicing, administration and accounting they provide. You typically will retain responsibility for some functions in each of these areas. Fund compliance with all rules, regulations, and laws, especially the recently enacted anti-money laundering and know-your-client laws, can become an onerous burden. You can determine the amount of compliance you want your hedge fund administrator to provide for your fund. A hedge fund administrator greatly reduces expenses and overhead for your fund and your investment adviser by eliminating the need for a larger administrative and operational staff. When your fund hires a hedge fund administrator, your fund pays the âfull freightâ or the full cost of their own operations. An outsourcing arrangement with a hedge fund administrator also enables you to purchase skills, talents and systems that you may find prohibitively expensive to purchase through your investment adviser. A hedge fund administrator will bring you access to people trained, and often certified, in accounting, finance and operations. A hedge fund administrator will also provide access to accounting, operational and client servicing systems that may be beyond the means of your investment advisory. Your investors will appreciate the independent third-party verification of your fundsâ operating results provided by a hedge fund administrator. A hedge fund administrator can also provide you custodial services to safeguard the investor monies and the assets of your fund. Professional accounting and finance individuals with investment industry experience will service your investors. These individuals bring a wealth of administrative and operational experience to the table. Hiring a hedge fund administrator increases the size of your operations by providing a virtual administrative and operations staff. Your investors will pay approximately one basis point (0.01%) of return per month for the benefits of these services, a cost, which will barely reduces the returns of your fund, but will greatly enhance the service. So to sum up, a hedge fund administrator will: Perform your critical, non-core administrative and operational functions, Reduce the operating cost of your fund and investment adviser, Relieve you of necessary and time consuming operational duties, Provide independent third-party verification and reassurance of your fund results to your investors, Provide access to accounting, finance and operations professionals and systems you may not be able to afford. In short, a hedge fund administrator provides support services to your investors and your business. Todd A. Krause Managing Member of Trident Financial Services, LLC Chicago, Illinois
But Don, the difference is that if he uses your capital and loses more than what he put up, he'd owe you money...If he loses investors cash and breaks down, he's not liable and probably none of it is his money...I guess thats why people start hedge funds..And as you said Don, I see no other advantage to it for the person starting it. Although that is a tremendous advantage to put others money on the line to make yourself millions. Kinda risk free...
Michael Lapat at http://www.turnkeyhedgefunds.com/ has been very helpful with all hedge fund questions/issues.
I thought in Prop trading you could lose no more than your 5k or whatever you put up? If that is so, would the Prop shop allow you to continue to trade into the negative or would you need to put up some more money? But Don, the difference is that if he uses your capital and loses more than what he put up, he'd owe you money...
Could be a little dated or info you already have researched. I haven't read it. http://www.hedgefunddynamics.com/free_book.asp
If you just want to manage money for a few individuals (say less than 15) it is very simple. Create a LLC and manage money through that. You may not be able to charge a performance fee but you can use the margin to make yourself some money. Up the management fee and you are on your way. I Agree, starting a hedge fund is expensive, but there are many other way to make money without going through a sorry ass prop firm. Bright whatever is a crook and a homer to ET. AVOID AT ALL COST!!! Good Luck.