Vulture wrote:
"I agree w/ the spirit of your post. You are absolutely right that the big money does not want big returns, they are more concerned w/ capital preservation. I know someone at a $900 million fund out of Minnesota, and their target is 15% a year. Sounds ridiculously low until you realize that they want to keep their max drawdown around three percent or something equally small. MUCH more oriented towards preservation than blowing the doors off. The bigger you get, the more you want to skew your specialty towards preservation rather than profits. The rich are generally more interested in staying rich than getting richer. Money is like quantum physics in that size has weird ramifications that you wouldn't expect."
Yes, I totally agree! Also, they you can't really do outsize returns when you are managing past a billion dollars. very difficult. With a few hundred millions you can still "double" or maybe even a little over 100+% return. But as you get closer and closer to a billion or over, you asympotically reach maybe 20-30% which is still very very good from historical long-term market returns!
You wrote,"I also agree that a guy who does not know how to trade should get as much of an edge as he can by getting a first class education. If you can make it into the ivy league, heck yes, do it, you want to put all the odds in your favor that you can. The thing that pisses me off is when these guys confuse educational background with trading ability. They are apples and oranges to the extreme. Nothing wrong with a kickass education, nothing wrong with polishing the resume til it shines, but the idea that an education makes you a better trader- or gives you a right to think you are better than anyone else for any reason- is just damn dumb. And I say this as an "educated" person who has studied in four countries, so I am not some high school drop out railing against the system. "
Again, true. Education is just an edge to get into the door. But I don't think it actually makes one a better trader so to speak.
You wrote,"The number of individuals who are actually good traders in the purest sense- who can make a solid living from trading and trading alone- no bells and whistles, no connections, no high powered quant calculators, no built in structural advantages- has always been small. And while some of these individuals are very smart, some of them are "stupid"- in an academic sense- as well. This is the point I've been trying to hammer home. It burns me that some folks around here think that their intrinsic net worth as people is higher because they have a few extra bullsh*t calculations rolling around in their heads."
TRULY GOOD TRADER is very very difficult to find or become. Most sell side traders(i.e Wall St/IB types) are NOT what I call traders - they are market-makers earning the bid/ask.
You wrote,"And the idea that working at a big shop is better than a small shop is silly too. A 50 million dollar shop that has five people will have the same paycheck distribution as a quant oriented half a billion shop with ten times the employees to pay. The only difference is the "prestige" of the "name" which, to me at least, is not worth jack. My own beautifully anonymous name is enough for me. Especially when you add in the ability to live in any gorgeous, low population, tax advantaged place you want versus getting smacked w/ a 57% tax rate, an astronomical cost of living, a ridiculous commute, putting on a monkey suit every morning, and kissing ass all day. "
Well, a half a billion dollar money management shop is VERY VERY small actually. The quant firm I was with had a $2Billion and the one before that had about $40B(but it's more of the mutual fund type. argh!). $500M is a drop in the buck. We had $2B dollar and only had 13 people in the entire quant firm! And half of those people are in research(phds quants type and me) and 2 traders just for execution, 2 marketing people, 1 secretary, 2 IT/sysadmin people. that's it. It's just economy of scale. It doesn't take more people to manage more money. it's called technology of scale. hehe. And no one kisses anyone's asses!
What pisses off is this! Only stupid Wall St/IBs lowly new "analyst" who just recent college grads from Ivies has to kiss all and slave all day for next to nothing salary and think it's all so "prestigious". haha. They haven't been in finance long enough! They don't even know what trading is about or managing money.
I'm so glad I left the sell-side to be on the true people of finance- buy side.
happy trading!
trader99
