Warning to Hedge Fund Manager Wannabe's

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

  1. kc11415


    Regarding the psychological impact of losses when you're handling investments for friends & family, this is much more common and institutionalized than just hedge funds. It is common practice for many large retail brokerage firms to deliberately take on many new brokers with the knowledge that the majority will wash out. They are then encouraged specifically to reach out to as many friends and family as they possibly can and bring the accounts to the firm. Then, even though that individual broker may wash out, many of the friends and family accounts will tend to remain with the firm. During the time the new broker is with the firm, they get caught up in the buzz and start to believe the hype that the firm's recommended lists represents the optimal investments for their friends & family. By virtue of their newly-minted Series 7, they think they know something about what makes a good investment or a good trade, even though that's not the purpose of a Series 7.

    You haven't seen how the major retailers play if you think the movie Boiler Room is only about little fly-by-night firms.
    One interesting question is which major player is the name JT Marlin supposed to represent. I know what firm name it almost sounds like, but there are other ways of playing with the name to see the name of at least one other firm.
    #21     Feb 6, 2004
  2. I agree with that...

    Trading does affect fragile persons the most. Yet all of us can feel great angst once in a while. But only a few will take drastic steps therafter. After all..... there are many losses in life, and yet not everyone kills themselves over it! I had a friend do the same (age 31) with a wife who was an R.N. and two children; an ostensibly happy marriage. It had something to do with the markets but after looking into it, he was abusing cocaine also and no one claims to have known it.

    However I in no way seek to minimize the loss by a friend's demise.

    #22     Feb 6, 2004
  3. zdreg


    this was a sad story. no one knows what pushes another person over the line.

    there was a posting about hedge funds advertising they were not interested in people with day trading or prop trading experience with actual advertisements. tried to find but could not find posting. can someone direct me.

    sorry for your loss.
    #23     Feb 16, 2004
  4. zdreg


    i just found it. PuffyGums
    Elite Member

    Registered: May 2002
    Posts: 1130

    01-29-04 02:32 PM

    Quote from sy5050@aol.com:

    the reason I asked about prop trading firms being an issue, was b/c quite a few job listing for hedge funds in new york specifically state no prop traders need apply. Just wanted to know if anybody encountered any problems in the industry.

    #24     Feb 16, 2004
  5. Definitely some good advice. While not a hedge fund manager, I do manage other people's money and use some strategies more similar to those of hedge fund managers than conventional asset allocators.

    Conventional asset allocators have a much easier job -- if their clients lose money, they can blame the market. Hedge fund managers and those with strategic approaches shoulder all of the risk and blame. That's not an easy burden to handle.

    Because of that I only take clients on referral. I don't advertise my services and have turned away a number of potential clients who I didn't feel comfortable with. You may think that's not a big deal, but I just recently started my investment advisory firm from scratch and have the burden of my wife's six figure student loans so it's not like I don't need the money. Similar to the post that I quoted, I only take a small portion of a person's portfolio.

    I think the best thing that can happen to a trader and future money manager is to blow up early in your career before you get too far down the road. I set up a small investment club a number of years ago for some of my college and family friends but I made all of the decisions (I didn't take a fee). I blew the account up and then took the next 2 years to pay everyone back. They didn't ask but I felt it was the right thing to do. While that experience really put me back financially, it was one of the best things that could ever happen to me because I learned about risk control.

    Sorry to hear about the guy who is no longer with us. My heart goes out to his family and friends.

    #25     Feb 16, 2004
  6. I believe I read something (maybe in "Market Wizards"?) where he distributed some of the profits from his fund each year to investors as a risk control measure. Even if it wasn't him that I'm thinking about, it's not a bad thing to do if you're a hedge fund manager.
    #26     Feb 16, 2004
  7. RedFox


    My sincerest condolences to you and the family of your friend.
    #27     Feb 18, 2004
  8. AC3


    My condolences and hopes that at least 1 person reads this and reconsiders......
    #28     Feb 18, 2004