Most fund operators have no fucking clue what is going on, the primary objective is to churn accounts and collect fees from the suckers who make the assumption that there is some secret knowledge or highly skilled mathematicians working on your behalf. Trust me you are just a number and it is like running a fast food restaurant, read what analysts say and regurgitate and churn. Quanative analysis is just a fancy term for rolling dice millions of times via computer software and then throwing out guesses. Most folks working at firms are lemmings and follow the crowd. Why do you think these portfolio managers kept loading customer portfolios with junk like these financial companies when the looming mortgage crisis was pretty much in plain sight. Simple, they really do not do any research they just follow crowds and follow what analysts say (Who pretty much skim over balance sheets and take swags + follow other analysts) no one wants to piss off the company analysts are paid to check out. Hedge funds, another scam most of what they do is buy stock and write options on them nothing real special. You can do the same thing, write puts on stock you want to own via limit orders, then write calls on them if they are put to your account, other hedge funds just gamble outright and will just throw out bets that make no sense period. Primary goal collect fees. For those who want to keep it simple. Here is all you need to do. Put write against SPY, and write calls on your SPY if they get put to your account. wash,rinse,repeat and you will beat the hedgies and have a portfolio that will do well for you over a 10 year period. If you have good reading comprehension, willing to spend a few hours a day keeping up with the news, reading the economist etc.., keeping up with the world around you, can read/understand balance sheets, have a good understanding on how the markets work,orderflow, how options get priced,basic hedging strategies,money management etc.. You will beat the "pros" over a 10 year period.
Money largely winds up in the hands of older women, their hubbies build up a fortune and die before their wives... so the financial industries best source of money comes from older women that are likely not comfortable with their money. The financial industry gives them the easiest way out of their discomfort... I know an 85 year old woman, has a big house as a rental, it's paid for, it's down by half from the peak, the tenants have screwed her over, etc. Some guys are talking her into selling it and putting all the money into TBills or something... we can't convince her that she will want that house when inflation hits, she is uncomfortable with our predictions, we can't convince her to get a pro to manage the rental, she is not comfortable with their fees. She is uncomfortable with our advice, with the house value falling, with the idea of renting it, with the idea of paying a pro to rent it but she will pay some guys to offer her an easy way out of her discomfort. They will get the realtor's fee on a million and a half, for some reason she's comfortable with that...
the old woman is right for things she understand. if she understood the other business (I could explain it to her in terms she understand), he will make the right decisions. the old little ladies are right in their instinct. In my view if one were to explain to them investing, he will do extremely well.
There is a flaw in there. Here what I do: I write calls to own a stock (I do not write puts to own a stock). Maybe it may look strange, but I like to do the "strange things" in markets. PS: anyone doing what I do? There are some additional tricks to it. You know what I mean. PM me if you want to know more.
we can beat the market cause we trade small size and we can go with the flow. it's as simple as that.
hedge funds are unregulated. Another twist is that these hedge fund could be making 50% annual returns in some years and only paying 10% to clients.