Access. Because you get access for large buying power that only hedge funds and real money accounts can provide. I don't mean inside information - but access to actual research publications (which can be rather good), access to markets that aren't open to public, access to data (think a few k's worth of data is expensive - try 200k a year), access to strategies and other managers.
I think you missed my point. If you are THAT good, you don't need the large buying power or access to markets that aren't public, or whatever else. Your true edge makes the difference. With compounding and a modest account, you can turn it into a small fortune. Again I see no need to trade for a company.
Did anyone touch the fact the successful record might not be indicative of actual talent? Then you'd want to move into the safest place, and that's not trading from home.
No. I'm not missing your point. I'm ignoring your point. Your point is asinine. "With compounding"? Clearly any nontrivial positive number compounded by another nontrivial positive number is going to yield a significant sum over time. But did you consider that that precieved edge is just volatility? How could you possibly be assured that your edge is in fact positive? "Your true edge" is one of those meaningless, "if I were" type of statements. If you had true edge that you know to be true and is in fact true, you might as well jump over a building and expect to fly. But hey, obviously the guy who trades equity from a "prop" shop doesn't really need to consider why any respectible fund has at least one person in the backoffice for every guy on the investment team; why marketeers take up half the floor; why decent sale side coverage is usefu; just trade your edge in your chart right?
Right! No need to be bitter, just accept the fact that there's more to life than your humble opinion.
What does that even mean? I'm taking the position that there's more to finance than just "trading your chart." That there's more to trading than some simple minded concept of "edge". And here you are, claiming that I need to see that there's more to life than my humble opinion? Argue that you enjoy the freedom of working for yourself more than the monetary reward of being an institution. Fine. That's at least a reasonable statement. But to argue your stance? You do know there's more to life, right? Oh yeah - that's right - compounding.... that'll solve everything. Because no one - none of the traders, market makers, portfolio managers, and analysts on and off the street have ever figured out their road to riches lie in the first page of their finance 101 text book. They are all idiots born with a silverspoon in their mouths. Awesome analysis. Brilliant!
There is a guy named Balyasny who was a prop trader in the late 90s / early 00s at Schonfeld. He now has his own hedge fund, last time I heard. The reason he would start a hedge fund rather than continue prop or trade his own money is probably the fact that hedge fund managers are amongst the highest paid people anywhere, once the size of their funds under mgmt becomes significant. Yes, there are prop traders who make the Trader Monthly lists. But look how few have broken the +100 million / year mark vs the # of hedge fund managers on the lists.