Warning to Hedge Fund Manager Wannabe's

Discussion in 'Professional Trading' started by Swish, Feb 5, 2004.

  1. mind


    I never lost much for other people, but i've been through enough very tough times, to have an idea of how your friend must have felt. it is impossible to describe the amount of frustration this business can put on you. you already give 1000% and you cannot get it run. you isolate yourself in grief and frustration and you become unable to move anywhere else because the amount of frustration forces you down on your knees.

    when i was very young i thought building system is a thing you do once and then you let it make money for you. now i think that there are very many easier ways to pay your bills than by engaging yourself in the market. check out one of acrary's post on how he changed during his trader career - and this guy is one of the best out there.

    within my team we have the rule: take the profits on your shoulder, but let the team carry the drawdowns. they come and i am very carefully checking my peoples' psychological condition.

    on the other hand i think that no one gets lost. your friend changed, went through a door, nothing more. you, me, all posters here, will follow him one day - one way or the other. and we won't be lost either. just a door. nothing more.

    peace and prayers to you
    #11     Feb 5, 2004
  2. I send my best regards to you and all that are affected by this. Thanks again for sharing with us this experience, Im sure that this will help someone, somewhere avoid a similiar road.
    #12     Feb 5, 2004
  3. Swish I am sorry for this tragic event. It just plain stinks that the loss of money led to your friend's death.

    A long time ago when I was with a major brokerage as an AE, I learned that managing OPM sucked. At least it did for me. When I was right, "they" thought themselves brilliant for investing with me. When I was wrong, I was an ass. That is not a good situation for me.

    Here is a link I have posted before. It is called "An Interview With God" and it is a slideshow. Regardless of anyone's spiritual beliefs, there is a lot of wisdom and beauty during the presentation. Please take a look and enjoy. Turn up the sound.


    Actually, Footprints is well worth anyone's time also:

    #13     Feb 5, 2004
  4. Swish, in behalf of the others in the community,
    our condolenses.

    Thanks for having shared your experiences, and know this, your having done so has helped you too. In that your healing process has taken a tremendous step towards closure in that you spoke your mind, and talked power to truth. These are some serious issues, and hot shot traders are not all that it takes to run an investment fund, hedge fund or to manage people's money. The pressures are almost incalculable, especially when they start getting emotional on the phone or crying or screaming at you.

    Thursday, Feb 5, 2004 WSJ section C or D has an article on the negative effects that being a CSR (customer service representative) has on their families after a few nasty or rude callers.

    Thanks for sharing your thoughts, heal soon. Take a vacation and re-evaluate even your participation in this industry and come back renewed.

    #14     Feb 5, 2004
  5. Swish, my heartfelt condolensces to you and your family regarding the loss of your friend.

    I used to rent some desk-space from a Hedge Fund manager in the late 90's who had a ton of money that he was managing, mostly trading the S&P futures and doing some small venture capital deals for start-up companies with a bit of stock scalping, holding nothing for more than just a few days.

    Unfortunately, he fudged his performance by carrying huge profits on his books from some of these "start-ups", some of which were akin to penny stocks on the Nasdaq Market Sytem. In fact, he would mark-up some of these stocks in the last 10 minutes of trading on the last day of the month so that he could boost his monthly performance figures. It was pretty easy to do since these stocks were so illiquid.

    In any event, the marketing guy that had been brought in to market the fund manger's 5 year track record for this "offshore" fund finally caught on to what the fund manager was doing, stopped showing up for work, and went into a huge depression, cause he saw the writing on the wall for himself, his credibility, his career, etc. And even though here was tremendous growth by this fund manager in the last 2 years of his fund. . . . Tons of interest by investors, very good numbers that appeared to be very stable, etc. GREED got the better of this guy and it took down everyone that was associated with him. Just watching the mood swings of this fund manager was worth the price of admission. But afterawhile, I too felt a need to leave because it was becoming a huge distraction in the "tone" of the office environment. Fortunately, I was simply renting desk-space from this guy and had a front-row seat, as did several other very senior Wall Streeters who were also renting desk-space, one of whom was a former Chairman of Salomon Brothers.

    Unfortunately, there is not much oversight in the hedge-fund business. The Auditor usually signs off on whatever numbers the fund manager sends his way. Meanwhile, investors who call in to the manager may think that the fund manager is heavily invested in oil issues, blue chip companies, etc., yet because he refuses to supply his investors with monthly summaries of the portfolio, he is able to hide the fact that he is spending most of his time trading S&P futures and committing capital to highly speculative "penny stock" issues, rather following the investment thesis of the prospectus that he was sending out to clients, and potential clients.

    The emotional stress that occurs simulates the rollercoaster chart patterns, much like some of the DOT BOMBS of the last speculative binge. It's sad to say, but this will be Elliott Spitzer's next big foray, especially since Hedge-Fund assets are now up to $700 billion and they took in an incredible $16 billion in 2003, quadruple their best year ever, of inflows.

    Again, I'm sorry about what happened to your friend.
    This can be a very cruel business for ALL involved.
    #15     Feb 5, 2004
  6. Aaron


    Most hedge fund managers are ethical and follow the investment program they have described to their investors. The reason the auditor usually signs off on the numbers the fund manager sends the auditor's way, is because they are usually correct numbers. Most auditors do a thorough audit and confirmation of all account balances. The bad apples make the headlines, but the vast majority of managers and accountants go about their and their client's business every day in an upstanding, and often outstanding, way without making the newspapers.
    #16     Feb 5, 2004
  7. Swish


    I appreciate everyone's response!!

    My friend had the highest ethical standards and there is no hint of any wrongdoing. He just got caught in a downward self-propelling spiral of loss!!

    Also, I'm not trying to communicate that no-one should be a hedge fund manager or hedge funds should not be invested in. Largely, my friend's problems were due to the relational issues of friends and family investing in the fund and his desire to protect them from loss impacted his trading - it was a vicious cycle to watch.

    I knew this trader well, and he was not unduly impacted by losing days, weeks, etc of his own funds - he took his licks better than I'm sure most of us would or could. Something about it being other people's money, especially people he knew well, made it different for him..........

    Thanks again,

    #17     Feb 5, 2004
  8. Banjo


    In a culture like ours where so much of value is disrespected and much vapid absurdity is highly respected the price paid or rewards garnered for stepping out into the world of public judgement can be extreme. I think traders who do so and venture into managing opm are like atheletes, the difference being that atheletes are accustomed to having only thier last game or event matter to the public, they know they can't let the pressure bother them or it may affect their performance. They've lived with it since their first game in grade school. They must shake it off to survive. Trading opm is a flashy biz no matter how subdued the firm, it's respected, it's a mysterious game to be won by only the talented few. It's an occupation that can't help but become entwined with ones self worth because it happens in public view. The other heavy aspect is the feeling/ acceptance of responsibility of losing someones money. To some it wouldn't matter but not all can shake it off. All in it's a heavier personal game than most realize and few are truly prepared for what they will encounter
    #18     Feb 5, 2004
  9. Swish, good public service message .thanks
    #19     Feb 6, 2004
  10. Truly a sad story, I am very sorry for your loss .

    There was, no doubt, underlying problem unknown to his friends. Emotionally stable people do not commit suicide over money or a job loss .
    #20     Feb 6, 2004