When I was 8, I was working a local paper route over the summer. I had a choice of employment at a local boutique ice cream parlor instead, but I felt that experience in public service might yield better career perspectives. Alas, it was not to be. One day, while throwing a copy of Hicksville Report into Mrs. Patterson's yard, I saw a crumbled green piece of paper on the sidewalk. It was a $50 dollar bill. Instead of buying myself some weed and a Playboy magazine, I opened an account at Interactive Brokers. The rest is history.
@sle. ...off topic but I think this topic is probably done. You have referred to "capacity limits" in other threads. Are you referring to infrastructure/technology limits or scalability of a certain strategy ? Thanks
Purely scalability of a given strategy. It might produce good ROC and really nice risk metrics. For example, I have some strategies that have really high turnover and as a result, produce ROCs of 50-75% and SRs of 5-6. However, at some point, the total output is so limited that the strategy is just not worth the effort required to maintain it.
Is that because the effort is not worth the opportunity cost or just not enough good ideas generated to trade the strategy ? Thanks
To quote Linda Evangelista, "We don't wake up for less than $10,000 a day." So, in case of systematic strategies (which is what I do at the moment), it's a question of the extra hassle and maintenance. Eventually, you have way too many strategies and life becomes messy.
Haha! Only if you'd only divested into weed and smut, would've made staring at the IB-TWS greek tables more psychedelic and tad bit arousing,
My friend, you don't realize the tremendous amount of risk one takes investing/trading with ones own capital, especially it when it becomes a sizable chunk of their net worth. Trading OPM lets you spread the risk and trade with a reasonably lesser levels of stress. There's a reason why Elon Musk raised money for SpaceX even while he could've bankrolled the entire operation. Tom Cruises production company raises money for his new movies. This way, they all spread the risk and reap similar (or more) profits.
I would equate your examples (musk/cruise capital raise) more in line with a private equity model. Does trading OPM have the same economics ?
Trading OPM covers a lot of ground, from helping your uncle manage his 401k to running a 10bn hedge fund. Different strategies, different models yield different results, so it's hard to generalize.