How to outperform the markets, if you are a fundmanager

Quote from MTE:

I didn't say you would definitely outperform the market, but can have a capital guarantee.

Yeah but that was the dream. :)


By the way, if outperforming the market was that easy don't you think everybody would be doing this!?


As it was mentioned earlier in this thread, lots of people are already doing this, thus I haven't discovered anything new.

But I do think, that sometimes the most obvious things are the hardest to discover. Also, it is possible that the average fundmanager probably wants to outdo the market by a decent % return and die (lose money) while they are trying. But with a 20/20, my plain sure would have looked good for them. :)
 
Quote from ImamicPH:

The June 07(almost a year) 125 call on the SPY is trading at 9.50.

You could buy 100 of those.

That's a hundred thousand shares point for point over 125.
More...

OK, that is finally a plan, let's do the math:

Let's suppose the market will be at exactly the same level as it is today. So we lost: 100x 100x 9.5$= 95K

So even if I make 4% in CDs, I lose 9.5% in your optionplan. So overall I lose 5.5% and underperform the market.

Any other plans out there??? I need a better plan than this... :)
 
Terrific but considering you are being compensated by a management fee on total assets, what do you do when new money comes in ? Also you have assumed you exist in a vacuum with no expenses or employees.
 
Quote from trader1966:

what do you do when new money comes in ?

Buy more ctrs, put more money into CDs?

Also you have assumed you exist in a vacuum with no expenses or employees.

With such a simple plan, who needs employees?
But seriously, those problems also exists for ANY fund. But to make it simple, in my dream I was a CPA with a fulltime job, running the fund was just a hobby and I only had 5 investors each investing 10-10 millions. I took off only .1% (that is 50K) for my expenses. They were also friends, thus I only needed to send them emails every few months about their account. :)
 
If all you're after is beating the market, tweak the Dogs of the Dow concept. I could tell you how, but what fun would that be for you?
 
ok lets try this one. There are annuties(yes dreaded annuties) that offer 0 - 9% on the SP. So market goes down 10% your return is 0; market goes up 13%, you gain 9%. So if you combined that with Selling a Put that is at the money and buying a Call that is 9% away, your gain on the trade is about 2%. You get the 2% in addition to what the SP does.
 
Quote from rws3z:

ok lets try this one. There are annuties(yes dreaded annuties) that offer 0 - 9% on the SP. So market goes down 10% your return is 0; market goes up 13%, you gain 9%. So if you combined that with Selling a Put that is at the money and buying a Call that is 9% away, your gain on the trade is about 2%. You get the 2% in addition to what the SP does.
More...

Well, this loses to my method, because:

-- it is not simpler

-- it doesn't outperform the market at anytime, even in your example when market went up, the system underperformed by 2% (13>9+2)
-- the extra gain is only 2% compared to my 4%

Again, if there was a simpler way to "outperform the market for sure in the simplest and less risky way" I would have dreamt about it....
 
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