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Hedging what bets? Most funds don't just go "long" or "short", it's a strategy that is pretty involved. For example, do you think you could trade treasury bond basis, CDS or variance swaps in your personal account? Yeah, really. It's expected and managers do it if they want to raise cash from...

Some top-line names even use funds closed to outside investors as an advertisement for their less interesting open funds (you can guess who that is). If there is a 4-Sharpe strategy, it's likely to end up in a partner/employee-only vehicle.

Because if you already have 50% of your PNW invested in your fund, you not going to have the required liquidity to have reverse exposure. Further, most people would not have the access to the same leverage and products as their fund (so it virtually impossible for them to reverse their exposure...

The topic is "Hedge funds keep two-thirds of profits", so it's pretty obvious we are not talking about mutual funds. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3428165...

We are talking about hedge funds here, not mutual funds. Most hedge fund owners or portfolio managers are heavily invested (significant fraction of their net worth) in their own fund (though, as one can imagine, there are some tricky bits there like they like to be invested in the least scalable...

Considering that all fund managers are invested in their own funds, thats not really true. Granted, at some ratio of AUM to own funds this risk becomes small, but it is only true for selected few.

Not really, though. There is a strong tendency in people to overweigh recent observations (i.e. 10 year bull run) and forget how it felt to hold an underwater passive investment. People who were holding SPYs from mid 2000 to mid 2011-2012 (i am too lazy to do any TR calculations) did not make...

I believe in the ability of retail traders to make money and there are some good examples here. Naturally, there aren't many of these traders here on ET or at large (whatever the 95% failure figure etc) but there enough to have a sample. However, it's reasonable to assume that fraction of pros...

It's a business. Despite what AT&T would make you believe, customers priorities come dead last after more important things like profits to the owners, staying power, cost efficiency etc. I would say 20-30% of funds actually deliver on what they have promised (alpha with low beta that justifies...

In fairness, that can be said about any entity providing a service at a fee. Don't forget that hedge fund as a concept has almost no barriers to entry - you get all sorts of frauds, ponzi schemes or beta vehicles in the mix. In a way, it's no different from choosing a plumber - picking a bad one...

Yeah, I've read the original paper a little while ago. On one hand, it's pretty biased against the funds which is common in academia (as always, depending on how you slice the data, you can come to different conclusions). On another hand, they are missing several sources of investor...

This thread is priceless!

Yes. The truth is out there! Tick-size for outright futures is 0.05, tick size for spreads is 0.01. What you are seeing futures spread trades.

Well, in fairness, a lot of that stuff made a comeback in the last year just in time to blow up a bunch of funds during the corona crash.

Regardless of who wins, this will never pass either congress or senate and will likely never come up at all. Even disregarding the Wall Street lobby (which is huge), the stock market is a political utility by now. No politician would fuck with it.

Both myself and Kevin come from academic backgrounds before moving to finance. I have, over the years, worked with plenty of failing as well as successful traders/PMs (and pretty sure Kevin has too). So we have a reasonable clue on how to distinguish cranks from geniuses.

Why not set it to zero and then you never lose money? :D

(a) Leverage is the ratio of your GMV to your capital at risk. The upper bound is dictated by your broker, clearing firm or risk capital (depending on where you are). The lower bound is zero, assuming you are carrying zero risk. Anything in between is up to you. (b) Of course, you can change...

You can patent a financial product or a process but there is almost no recourse if someone creates an effectively identical product. For example, MIAX Spikes is a VIX clone that uses SPY options for calculation and V2X is identical to VIX but uses Stoxx50 index options. In any case, the...

For those who are too lazy to google the general idea is that a $1 initial pot and a fair coin, you get 2x of previous pot every time the coin lands heads. So if you throw forever your expected value is infinity (i.e. p=1/2 * 2 + p=1/4 * 4 + p=1/6 * 8 ...) but if you are playing against a casino...