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Mission accomplished.

It feels like Ben is fighting the last war. He's an expert in the period 1929 to 1940 but perhaps his focus should be on the period 1940 to today when the dollar became the main reserve currency dethroning the pound. We as americans will loose a lot more if the dollar losses its reserve...

Just to clarify, the split between the partners was close to 50/50. 1/20 was the advisor's fee, which is pretty standard. (1% of assets under management and a performance fee of 20% of returns subject to watermarks).

Agree, in the end it was a win win. Nothing left but move along to better pastures.

If you are some Goldman guy or someone with pedigree groomed near some hedgie big wig, yes, you can cut yourself any deal you want. But a lot of traders are not like that. The guy with the strategy agreed to the deal in order to put some cash into his bank account which he did. Everyone has...

It appears that the junior made a mistake and is paying the piper. The strategy was a fairly complex market neutral long short. Chalk up another lesson from the school of hard knocks. Thank you for your insights into this.

The investment advisor was set up as a Delaware LLC. All of the following were spelled out in the operating agreement. The guy who brought the investors was the managing member. The guy who brought the strategy was an admitted member, with no voting power over the management of the LLC...

Thank you for replying. It makes sense, and I suspected that that may be the case.

Suppose two partners form an investment advisor. One brings capital from personal high net worth connections. The other programs a systematic investment strategy. The partner bringing the capital is majority owner and has control. After several years, the partner with connections learns the...

In emg's defense, there is one data point to support his claims. Someone went through the disclosed SEC documents for TUCO. What he found was close to the following. Something like 90% of their traders lost money. 7% were close to break even. 2% were making a living and 1% were killing it...

Are you sure you are part of the "we"? To my knowledge the printing press conjures money only into a few select pockets. It is true, it trickles down to most of us after the debasement happened but before it is fully understood.

Agreed, but I was looking for more detail on it. An index out of the money put writer can look like a genius for a long time before he blows up. So what criteria do you use to judge that consistent profitability is genuine. A full business cycle (could be 8 years). Two full business cycles?

What would convincingly demonstrate that someone has genuine trading talent?

All my backtests use some form of walk forward analysis. Do not trust in sample backtests. Whenever I see a very smooth equity curve, the most likely explanation is some kind of mistake. Most common mistakes are look ahead and suvivorship bias, or unrealistic execution costs.

Thank you Mike for the detailed response. As I understand it, you first allocate the risk on individual bets in each strategy. Then you calibrate a strategy risk allocation scheme that determines the position size for the portfolio of strategies. Makes sense. I also found it easier to model...

Mike could you please elaborate on your take on the size of equity positions you put on. I understand that you do not want any one size to be a large part of your equity because of event risks (takeovers, bankruptcies, accounting fraud etc.). Also you do not want a position to be large...

I lived through one hyperinflation. The outcome was as follows. The politically connected with vast access to credit, (the hands that got first use of the freshly printed money) bought hard assets or productive economic entities and made out like bandits. The middle class was wiped...

Maverick, today's fed statement explains what you saw with ACD on August 2 in bonds, which at the time seemed weird. Who knows these things before they are announced?

SPY had a lift because the bernank reiterated that he would rather toilet paperize the dollar than let the market correct.

Shortie, I think you are right in a moderate to high inflationary environment. In a hyperinflationary environment, I believe gold will outperform stocks. One supporting datapoint is the German Weimar hyperinflation. 100 ounces of gold invested in the German stock market in 1913 would have...