I have to make a few points here Timmy from someone with experience, not more than most here but enough to make my comments: 1. The SEC does not shackle or censor the industry. Mary and John Smith, the average retail investor out there does not have the discretionary dollars or financial know how to invest in hedge funds. The main reason for many rules and restrictions in the laws is that due to the risky and non-public nature of hedge funds, the average investor should be prevented from putting their meager investment dollars in there just to see it get blown up. The rich are either very sophisticated or have the money to afford fancy financial managers to due the due diligence for them if they wish to put money into hedge funds. This is not the class the SEC needs to protect in their point of view. However making penny trading available to the average investor and attractive is certainly within SECs purview. But simply telling a story for fun is not something that would seem to be censurable ( I will admit I do nto have an informed statement on this fact and leave it to you) So to say people have been kept out of the knowledge loop by the SEC is naive of the actual laws out there and their original intents. You are not shackled, the rules are clear in how and who you can talk too. Ms. Mary making $40k a year teaching English does not need to be thrown into the hedge fund industry. 2. Penny stocks are the riskiest investments out there. Anyone with true knowlege of ivnesting knows this already and you are not adding anything new. I think you admit not knowing anything about this sector when you got in. So in reality you needed to educate yourself. The average American might find it anecdotal to learn about penny stocks but they should not even touch them. A book is not needed to tell them this fact of life because most of them knew nothing about penny stocks before hand anyway. The worst thing in the world you can do is pretend to teach people how to actually make money in penny stocks and encourage them to go into this field. That is financially irresponsible. 3. You are closing your fund for one reason only, to stop trading (it was mostly your money anyway) and focus on the new career you have started. The SEC is not handcuffing you in any way since I see advisors all day on CNBC talking their book with full disclosure. People here truly do not hate you they are insulted by the double talk as though we are the naive group of people you are selling the book to. 4. You are not offering any amazing expose on the hedge fund industry. The rules and restrictions on hedge funds and advertising is easily found on Google. They all come from the SEC laws on the books since the 1930s. You are more focsued on the manipulation that occurs in the penny stock sector and again, the informed already know that a $0.40 stock with 5000 shares traded is easily manipulated. My point is that you traded from your living room and started a hedge fund with your own money and a few investors. You actually do not have true insight into the hedge fund world because you were never in it. Jim Cramer was in the hedge fund world, Long-term Capital Management, the guys on Wall Street with $1 billion in assets are swimming head deep in the real world of raising capital, managing assets, leverage and returns. So it is a little misleading. I think you would have done better marketing talking about the penny stock markets and focusing on that. Your complaints on the SEC and the hedge fund industry is like a college Division 2 ball player claiming to critique the Major Leagues, from the outside. So stop for a second and realize that behind these names are people with long industry experience and trading backgrounds who have a better sense of what the industry is and can see that you are waving your hands to get the attention but lack the substance. And no I do not need to read the book because you have already told me all I need to see. Trading your own account pretty much and in penny stocks and with assets of less than $2 million is not the hedge fund industry. I know many retail acconts which are much bigger and more active in alternative investments but so do a lot of people here. Your marketing approach is not for the industry it is for those ignorant of the industry who dream of trading so they live through your story but for myself, I live this everyday and understand the SEC laws and industry regulations. So I say this without trashing since I support you in your book as writing a book is a wonderful experience. What I take issue is the claims that you and the book and what you are offering are something they are not. Fine for the uninformed public since they do not know any better but for most of us familair with penny stocks, hedge funds and the SEC, it is more of the same and what Google can reveal. If you wish I can put a detailed google collection of info right here.
No it's my first mainstream review and you're gonna read it because he actually gets what I'm trying to accomplish here: September 28, 2007 11:49 a.m. EDT TAKING STOCK Boy Wonder Tells Wild, Cautionary Trading Tale By SPENCER JAKAB A DOW JONES NEWSWIRES COLUMN NEW YORK -- At a time when most teenagers are concerned with little else than their social lives or their SAT scores, Timothy Sykes became obsessed with getting rich and did so with astounding speed. In his upcoming book, "An American Hedge Fund," Sykes tells the story of how he took $12,415 of gift money he received for his Bar Mitzvah and turned it into a $1.65 million fortune in a few years of frenetic stock trading. Giddy from his rapid ascent but still naive in many ways, Sykes went on to found a hedge fund and, after initial success, was stung by steep losses. Now just 26 years old and a budding media personality, Sykes is deluged by people looking to emulate his early success and says that's why he wrote the brutally honest tale of sudden wealth and hubris. "It's inspirational but also cautionary," he said. Holden Caulfield Meets Larry Livingston The tale is "like a Catcher in the Rye for traders" in the words of Aaron C. Brown, an executive at giant hedge fund company AQR Capital Management and an author in his own right of the acclaimed book "The Poker Face of Wall Street." There's certainly a dash of Holden Caulfield to Sykes, but there's at least an equal part Larry Livingston, the trader in Edwin LeFevre's classic "Reminiscences of a Stock Operator." Though nominally fictional and written in the first person, Livingston's story is a thinly-veiled biography of Jesse Livermore, the "boy plunger" who captivated Wall Street in the early 20th century with his bold, instinctive trading. To round out the package, there's a good bit of James Cramer in Sykes too. Just like the media mogul and former hedge fund manager, he is manic and somewhat eccentric but nevertheless an astute self-promoter. Sykes created a small scandal when he appeared on CNBC accompanied by three scantily-clad models who held charts for him and he was the star of the documentary Wall Street Warriors, in which he trades in his bathrobe and bares his emotions as he topples furniture in the wake of losses. Most recently, Sykes landed on the New York Post's Page Six gossip column under the headline "Party's Over for Hedge King" after he was disinvited to a gala held by Trader Magazine. The magazine's editor took Sykes to task for his self-promotion and called his recent trading performance "laughably horrid." Sykes' results weren't catastrophic -- after all, his Cilantro Fund outperformed much bigger and more sophisticated funds like the slumping Global Alpha run by Goldman Sachs (GS) and didn't blow up the way some funds run by Bear Stearns (BSC) did -- but they certainly weren't pretty. His roughly $3 million fund, which had a short bias, took a huge long position in a single speculative software stock and sank by $700,000. He said the losses "pain me every day" and he lays blame on his huge early success and overconfidence. "I was young, cocky and naive -- I had everything working against me," he said. His fund will officially close on Oct. 1, partly due to poor results and partly to avoid SEC censure for discussing his performance in his book, which will be released the same day. "I Had Much Bigger Dreams" What can a reader learn from someone whose performance was so volatile? Plenty. In addition to being an entertaining first-person account of shocking successes punctuated by brutal setbacks, Sykes outlines many lessons he learned the hard way and does an admirable job of probing his adolescent experiences and his personality for his weaknesses. Though he didn't realize it, Sykes caught the trading bug as a preteen through his early business ventures. He speculated in baseball cards and set up a small tennis racket-stringing operation. Both were marred by his impatience and tendency to cut corners, particularly the stringing business. By drilling holes in his own racket frames to make stringing faster, he inadvertently killed his budding dream of tennis stardom by weakening them and injuring his elbows. The upshot of the tennis injury was that he suddenly had time to try his hand at investing his Bar Mitzvah money. He soon began cutting classes and camping out in his school library, dashing between three computer terminals all day to monitor the action in bulletin boards for highly speculative microcap stocks, the only ones he could afford with his tiny account. His timing to start trading was perfect -- November 1998 -- the beginning of the final, manic phase of the bull market that saw the tech-laden Nasdaq gain over 170% in 16 months. While most novices and pros alike focused on big tech names like Microsoft Corp. (MSFT) or Cisco Systems Inc. (CSCO), he traded stocks that would jump 30% in minutes on gratuitous press releases containing more hype than substance. These microcaps would become his specialty throughout his entire trading career, much to his detriment when he started playing with millions of dollars. "It wasn't a scalable strategy," he said. Sykes was a both a phenomenon and an oddball at college and spent much of his time trading. By April 2000, with over $500,000 in his account and the action in speculative tech stocks decidedly negative, he channeled his growing skepticism about penny stock promotions into short selling. Making negative bets on dodgy companies proved trickier, however, even when scandals struck. "It's a lot more difficult," he said. "These stocks go from $2 to $8 in a day and not from $8 to $2. Even when the FBI raids their office, they only drop to $4." No one can accuse Sykes of being overly sentimental. Following disasters like the Sept. 11, 2001, terrorist attacks and the Asian tsunami, he said his thoughts quickly turned to what stocks would benefit or suffer. When he realized while still in college that he had made his first three quarters of a million dollars primarily off of exploiting "gap-up plays" in microcap stocks being touted by fraudsters, he quickly rationalized. "I felt bad for the boiler rooms' many victims, but the victims' losses were their own fault: a direct result of greed, ignorance and laziness," he wrote. While trading his own account, Sykes profits were both huge and hugely volatile: 910% in 1999, 560% in 2000, 47% in 2001 and 98% in 2002 according to an audit. But he did it with huge swings, making $700,000 in his personal trading account one year by entering $100 million in trades, most of which were only held for hours or minutes. Now he wanted to start a hedge fund and take things a notch higher. "I thought it would be a cinch to raise a few million dollars," he wrote. Again, his impatience and impulsiveness hurt him. His newly-launched Cilantro Fund had trouble luring big investors and he ignored advice by pros to try a less-volatile, more-sustainable strategy. After some choppy years his media star rose but his performance finally tanked. Will the losses at Cilantro end his investing career? Sykes predicts that, in an industry known for its short memory, he'll be back. "People say: "Your career is over." I mean, it's a joke -- look at all those Long Term Capital Management guys who run billion-dollar funds." It's conceivable that the money Sykes made by trading may one day pale in comparison to what he earns as a media personality. Craving the spotlight while being willing to bare his soul, he could be the twentysomething generation's answer to James Cramer. Even so, like many speculators, perhaps too much of his self-worth is tied up in his trading success, which he says he enjoys more for "the high" it gives him than for the riches. His losses seem to have tempered his still considerable self-confidence. "I had much bigger dreams," he said. "Reality taught me a lot." (Spencer Jakab previously wrote the STREET SAVVY column, which has been rebranded as TAKING STOCK, a new global column which gives insightful analysis about equity-related topics around the world.)
I'm not saying the public should be allowed into hedge funds, but they should be allowed to learn and possibly employ the strategies that hedge funds use. Not to mention our inability to speak our minds has created an industry full of erroneous reporting, gossip and gutter talk. Woldn't it be nice for reporters to actually be able to interview their subjects instead of just guessing as to their motives?
Again Tim, anyone can learn about hedge funds. You are being way too naive. I said it before, anyone can learn about this stuff if they want. For someone who is new in publishing let me say you are unaware of what is out there. Not a good business idea: Hedge Fund for Dummies by Ann C. Logue The Fundamentals of Hedge Fund Management by Strachman All About Hedge Funds by Jaeger Investment Strategies of Hedge Funds by Stefanini Handbook of Hedge Funds by Lhabitant Understanding Hedge Funds by Frush How to Create and Manage a Hedge Fund by McCrary U.S. Regulations of Hedge Funds by Friese Investing in Hedge Funds by Nicholas Hedge Fund of Funds Investing by Nicholas Hedge Funds:Investment and Portfolio Strategies by Lederman The Hedge Fund Edge by Boucher Market-Neutral Investing: Long/Short hedge Fund Strategies by Nicholas Evaluating and Implementing Hedge fund Strategies by Lake Trade Like a Hedge Fund by Altucher I could go on but basically there is a lot of information on hedge funds, how they work, their different strategies and regulations and more info for free on Google. Your best marketing point was the penny stock angle.... not "educating" on hedge funds which you are not yet there and also you need to accept the fact that there is already a ton of info in the market.
Sykes said: "Wouldn't it be nice for reporters to actually be able to interview their subjects instead of just guessing as to their motives?" No Tim, just make money for your Fund investors(we do not need to hear your BS excuses for Fund failure). Tim: Keep Cilantro Fund open if you are any good at managing money and collect your very nice 20% performance fee!! Alternatively, get another job/go away from ET!!