Are Hedge fund strategies really that complex?

Quote from MAESTRO:

I have started developing trading systems in 1992. I have tried about everything that one could possibly think of. My conclusion: Only very simple, robust, non-complicated systems with minimum arbitrary parameters work best! We are running our fund using 5 - 6 very simple, down to earth strategies. Of course, they are simple if you discover them and understand them well. And that, of course, is the main challenge!
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That resonates.
 
Quote from magnum29464:

I'm relatively new to the financial world so my confidence isn't there yet. its basically a little better than a bank account. I also learn a lot about things that the big brokerages have access to that I don't and how they work just by calling him up and asking questions. Sure he's just a salesman/broker but he also provides some insight that i would have never gotten. It doesn't surprise me that he doesn't completely understand hedge fund operations because I know his limitations and biases but he is still a good source for a non-pro like myself for things like understanding the real life details of things like a bond auction or purchasing a cdo. Sometimes i just ask him things to get a better understand what the big guys do or it could be simply to understand how they go about placing an order for something. I probably will always keep the account when I think about it....
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Let me introduce you to my financial advisor: www.investopedia.com
 
Quote from TudorJones:

So what is this theory called, the Lunch Napkin Theory ??

Anyone can explain anything on a Napkin, but the question remains as to.. to you, the reader will you be able to comprehend it. Thus, it is not the "strategy" that needs work, but rather our minds.
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Didn't Timmay's DVD teach you everything you needed to know? Why are you wasting your time here instead of banking $$$$$?
 
Quote from riskfreetrading:

If the strategy cannot be written/explained on a lunch napkin, then it is not profitable. Your financial advisor needs a financial advisor, as for you, you need to change your financial advisor or become a financial advisor.
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I think thats close to true if you are a discretionary trader, but if your trading on an algorithm and using automated strategies thats probably not true. I know of a very successful trader who uses nothing but automated strategies and he has well over 100,000 lines of code in his system, which performs very well.
 
Quote from quantumrock:

Let me introduce you to my financial advisor: www.investopedia.com
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I use investopedia also. I've found wikipedia to be a huge help also in learning the details of some instruments, but having someone to just ask about things you dont completely understand is valuable also. I find boards like this one infinitely valuable for a huge amount of topics. theres no one smarter than a huge disagreeing mass of people. thats why the market discounts things early.

personally I've learned more things more rapidly using forums than any other method.
 
'Your financial advisor needs a financial advisor'

well said!

HF fleece returns from investors and still average out only 2-3% over the buy and hold returns.
 
Quote from riskfreetrading:

If the strategy cannot be written/explained on a lunch napkin, then it is not profitable.
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This is close.

I would put it this way:

If the trader cannot clearly explain what "market inefficiency" he is exploiting...
And what "competitive advantage" allows him to do so...
TO ANOTHER EXPERT TRADER...

Then you have precisely NOTHING.
 
Quote from Brandonf:

I think thats close to true if you are a discretionary trader, but if your trading on an algorithm and using automated strategies thats probably not true. I know of a very successful trader who uses nothing but automated strategies and he has well over 100,000 lines of code in his system, which performs very well.
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In this case the "competitive advantage" is expertise in technology...
But this guy...
Should be able to explain precisely what "market inefficiency" he is exploiting...
Or I would not take him seriously.
 
Quote from TudorJones:

So what is this theory called, the Lunch Napkin Theory ??

Anyone can explain anything on a Napkin, but the question remains as to.. to you, the reader will you be able to comprehend it. Thus, it is not the "strategy" that needs work, but rather our minds.
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You took my analogy, and made it a theory. Your wording is nice!
Here is another way to look at things. Imagine that your HF or financial advisor is a boxing/martial art champ. Now who do you want to be on your side:

1. Bruce Lee with his fancy moves (but probably no punch in reality) in a movie, or
2. Mohammed Ali with hard hits that lead to KOs.

1. is movies, but 2. is the real thing. I want the real thing on my side.:D
 
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