A Fund vs. Your Own Money
- Thread starter Opulence
- Start date
Yeah it's called building a real business instead of trading (gambling) from your bedroom.
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Anyway, raising small amount like 5 or low 6 figures is not hard at all.
Millions is a different story of course.
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Anyway, raising small amount like 5 or low 6 figures is not hard at all.
Millions is a different story of course.
The following was my comment on your above quote:
I forgot to mention that the other reason you know no professional asset allocators lost money with Maddoff is Maddoff himself would avoid getting involved with professionals and just stick with fleecing the retail/amateur lambs because he knew his positions wouldnât line up with claimed P/L.
The reason he would avoid allocations from professionals is he knew that the professional asset allocators get the actual positions from the brokers and futures commission firms downloaded into their operational departments every single day. This is so they can confirm everything is ok and the hedge fund/CRA etc is staying within risk parameters, no strategy drift etc.
Maddoff would never be able to do this since it was all fake so he would be âcaughtâ by the professional asset allocators as soon as he âdidnâtâ put on real positions.
Maddoffâs customers were armatures like lazy financial planners, rich and famous etc that just looked at Maddoffââs own generated financial statements rather than seeing and analyzing the raw positions each day in close to real time.
Maddoff just didnât have the infrastructure, technology and knowledge required to fool someone looking for real positions, confirmations and reconciling positions to stated P/L etc.
Hope that issue is a little clearer now.
No smoking here; I am an avid free diver and blue water spearfishing fan so my lungs are my life.
Years and years ago I used to fence internationally for Canada and was known for my fast fleche attack so the nickname came from the âsmokeâ left behind when I would fleche. Just had the nick name while I was active internationally but those days are long gone. I just keep it on the internet since it is rarely used as a handle.
BTW the rules of Sabre fencing changed after I retired and the fleche attack is outlawed in Sabre but still allowed in foil and epee.
All the best,
Cheers Smoker
You have some good information about the industry, but what you are saying about Madoff is not accurate. The biggest losers were not direct, small or ignorant investors, but feeder funds (including funds owned by major banks) who held themselves out to the public as sophisticated asset allocators.
In fact, some of the worlds most sophisticated (and perhaps the most sophisticated) fund-of-funds and hedge funds invested in Madoff indirectly through total return swaps. Banks, which obviously have an incentive to verify collateral, etc, were lending large amounts of money to institutional investors who were then offering this "geared" product to investors.
Now, you could say that all of the above "Asset allocators" failed to maintained the standards that should exist within the industry, but to say "no professional asset allocators lost money with Madoff" is 100% at odds with the facts.
It must also be remembered that like all Ponzi Schemes, aside from mgt fees investors did not on net lose money with Madoff. Rather, it was a massive transfer of wealth from the many to the chosen few. The most Chosen being Mr. Picower, who earned something like 1000% returns per year in his last few years of investing with Maddoff and withdrew something like 7.2 Billion from the scheme in profits. Shockingly, he "drowned" in a swimming pool a week before his court date. In other words, we will never know the full truth about this scam or even what its full purpose was and how the wind-down ended up going (I presume) so wrong.
Don't want to take the thread further off topic, so will not continue to engage this topic here.
he "drowned" in a swimming pool a week before his court date. :eek: :eek: :eek:
Hi MrN,
Well maybe we are talking semantics here but I personally donât view anyone that ever used a fund of funds or feeder fund to do their investing as a professional asset allocator.
Professional asset allocators do their own due diligence and do not pay other people to do it for them.
Someone that offers this âgeared productâ to investors is selling the product to naïve investors and not professional assets allocators.
The professional asset allocators avoid any kind of financial engineering product and instead do it themselves by using ârawâ product to create any kind of risk profile they wish.
You never pay fees to someone else to do financial engineering the same way as a professional you donât pay a fund of funds to do due diligence. That is your job and there is no reason to have a professional asset allocator on the payroll if he is farming out his job to outside funds of funds and paying fees to those funds of funds.
I think you are being very forgiving with âAsset Allocators failed to maintain standardsâ and I would instead say anyone that invested with Madoff didnât do any due diligence at all because Madoff couldnât pass even the most rudimentary due diligence.
And as I said previously even if Madoff somehow bribed or hypnotized or blackmailed a thumbs up on an allocation from professional asset allocator the whole thing would fall apart the first day the money was invested when there would to no positions to upload to the professional asset allocators operations department.
The only way Madoff could keep the con going is if he only had customers that took his P/L statements on face value as true. And no professional asset allocators I know of in the industry ever takes anyoneâs statements at face value as true. The only people that do that are by definition (at least as I define professional) not professional asset allocators.
Anyway just my two dirhams worth!
Cheers Smoker
Well maybe we are talking semantics here but I personally donât view anyone that ever used a fund of funds or feeder fund to do their investing as a professional asset allocator.
Professional asset allocators do their own due diligence and do not pay other people to do it for them.
Someone that offers this âgeared productâ to investors is selling the product to naïve investors and not professional assets allocators.
The professional asset allocators avoid any kind of financial engineering product and instead do it themselves by using ârawâ product to create any kind of risk profile they wish.
You never pay fees to someone else to do financial engineering the same way as a professional you donât pay a fund of funds to do due diligence. That is your job and there is no reason to have a professional asset allocator on the payroll if he is farming out his job to outside funds of funds and paying fees to those funds of funds.
I think you are being very forgiving with âAsset Allocators failed to maintain standardsâ and I would instead say anyone that invested with Madoff didnât do any due diligence at all because Madoff couldnât pass even the most rudimentary due diligence.
And as I said previously even if Madoff somehow bribed or hypnotized or blackmailed a thumbs up on an allocation from professional asset allocator the whole thing would fall apart the first day the money was invested when there would to no positions to upload to the professional asset allocators operations department.
The only way Madoff could keep the con going is if he only had customers that took his P/L statements on face value as true. And no professional asset allocators I know of in the industry ever takes anyoneâs statements at face value as true. The only people that do that are by definition (at least as I define professional) not professional asset allocators.
Anyway just my two dirhams worth!
Cheers Smoker
I sir. From a bank, to own money, to a different bank on a different desk. Running bigger positions on smaller margins with a lower cost of funding.
heech,
Waking up an old thread to see what your current though is on this subject..
-gariki