Bullshit. Talk about dumb; I can't believe on a message board of so called "Elite Traders" nobody knows even the most basic financial economics. malaka56 asks, in essence, why can't all institutional investors earn fantastic market beating returns. The reason is because it is impossible. For any investor to beat the market, there must be another investor underperforming the market. Institutional investors control a majority of securitized wealth, so in order to beat the market, they have to be taking money from each other. They can't all win. The only way to consistently earn enormous market beating returns is to find a way to consistently exploit the poor investing decisions of a other people. Leverage, for example, is simply a way of increasing the number of dumb people you can bet against. Eventually, with enough success or enough leverage, even the smartest investor will run out of dumb counterparties. It is mathematically inevitable that huge returns can only be accomplished with a small proportion of market wealth. Thus, any sufficiently successful strategy will eventually outgrow its success and end up earning boring, pedestrian, mutual fund returns. Comparing traders in contests with real money managers is a joke. Martin
I think the factor you may be looking for may be threefold. 1. a manager may also take into consideration the risk tolerances of his clients therefore will limit his drawdown and risk-taking to meet their needs. whereas before when he was a private trader his risk tolerances were different. 2. the markets do not always produce profit-capturing opportunities. when they are there, fast traders may capitalize on them. when they are not, and traders push it they can lose. markets can be flat, moving well, or volatile. If they are not, some traders simply don't enter the market - overall in both cases reducing their returns for the year. 3. even the best trading systems work in some kinds of markets and set-ups but may not work as well in others. the markets are always changing. a killer system that works perfect for a day or a year may suddenly begin not working as well. again, diminished returns are the result.
That is very true for you. There are many people in the world who think anything clear and important can be written on one page. There are others who have attention deficit disorders. How far did you get in reading what I wrote? Did you break it up into parts by reading as far as you could and making a note of where you had to stop? If so, how long did it take you to recover from the effort? If you answers these Q's don't feel compelled to do it all at once if your given answer is in depth.
Don't be so quick to knock portfolio rebalancing. While I am leery of its long term implications in an uncertain world (i.e. what has worked for the last 70 years post depression may not work in the future), you must admit that winning a nobel prize for something (MPT) does at least suggest that, at the time, it was a good idea. The main tenet of MPT & rebalancing is that it minimizes overall risk while coming close to maximizing overall return. While I cannot find the specific numbers from a study I recall reading, comparing a rebalanced to an unbalanced portfolio gave you a 10% avg return with a -4% max annual Drawdown for the rebalanced portfolio vs. 11.2% annual return and a -10% max annual drawdown on the non-rebalanced portfolio. For my "I need this money not to go away " portfolio, I'll choose the rebalancing. I'm not looking to make a killing there, just have a reasonable chance of preserving capital and outpacing inflation. For my "aggressive investment" portfolio, I'll probably not rebalance - rather just trade in and out of funds, ETF's or individual larger caps. 20% maxDD there for a 20% or larger ann yield. For my "risk capital" portfolio, I'll never rebalance. But I'm willing to risk 50-100% of that portfolio for a 100-300% return. Those are purely spec plays, options, growth small caps, futures, whatever. And for the record, since a lot of these funds are really similar to trading an index, why can't you 'trade' them? One of the most important decisions you will make is WHEN you buy into the fund, so if you know that the market is going to crap out in october, why would you purchase your S&P index fund in september? Buying yesterday vs at the top in september saves you 4%, which is about half your annualized expected gain after expenses. Now, it is much easier to have an 'up' year. Ditto for the rebalancing - choose your view and go with it. If you are wrong, well then you're wrong. I'll make $$ any way I can. I'm not too proud to use 'funds' when appropriate. But I'll choose my entry/exit points, thanks.
the second sentence after "Here's a short story......" 20 minutes. no no wait! 15-minutes. yeah.. no no wait! yeah... more like 15-minutes. Oh-Kay.
they are not scalping. they are trying to earn fees. this is a fee based business, just like wall street.
Fees which are paid monthly or quartely why do you think they push the prices at month end quarter end. They get a % of assets under management. a tiny increase in this fee adds up over years. They are not paid for performance.