To me the only difference is time frame.
Making $1 bln from trading with no outside investors (Part 2)
- Thread starter pinetboltz
- Start date
uh, if you want to get into the semantics:
1) I specifically referred to him as a private investor in my post
2) The title of the thread refers to Part 1, where the original thread discusses making $100m from trading for institutions vs. own capital & whole point of even bringing up topic is to discuss the feasibility of achieving $100m - $1 billion with no LPs/outside investors
3) Generally if something can be done via investing (longer time-frame), it can be done via trading (shorter time-frame), but not vice-versa. eg. Even with capital gains tax, a lot of wealthy individuals / institutions use total return swaps to completely hedge out their risk if need be, while keeping the stock on their balance sheets for eligibility on long-term capital gains. Thus if something can be done with investing, it can be done with trading.
4) Trading is a superset of investing. Thus, by logical definition if something is achievable with investing, it is achievable with trading. eg. It is shown that it's possible to reach outer space with a rocket. A rocket is a man-made vehicle. Therefore it's possible to reach outer space with a man-made vehicle.
5) You never even defined investing vs. trading time horizon yourself. There is no clear boundary. When is trading investing? When is investing trading?
I specifically referred to your thread title...you see it below and I've now underline the word trading just in case you forgotten and as noted earlier...the article itself had no references to trading...just investing (investor).
Making $1 bln from trading with no outside investors (Part 2)
For the record, if I was going to hang out at a forum about "investments" or "investing"...it would not be Elitetrader.com
It's a simple question...do you believe someone that owns a stock +20 years since its IPO days is an inverstor or trader or just semantics after the person states its a good investment that he stands by ???
wrbtrader
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Depends.
This exactly. You need to double $10M seven times to reach $1M. You need to double $10,000 seventeen times to get the same result. This guy is getting $10M a year in revenue from his business. So he can give it a try with $10M and fail and he just tries again next year with that year's $10M. So he can try year after year to hit that 7 doubling streak.
The average ET punter, on the other hand, has to work years to hit $10M the first time, they don't have enough lifetimes to try more than once.
Trading and investing is all about trying to beat time.
Im very surprised that a total return swap doesn't offset capital game status. Seems highly unlikely. It's been a while,but I do recall that if one bought a put option within X percent of the Stock price, the holding period was "reset" as one effectively shorted a like and similar security.Hedging with a total return swap should be no different than selling the security,unless things have changed..
You're correct, although you can imperfectly hedge with a similar but not exactly the same security and not run afoul of that rule.
the point is, when they are that level, they get what they want anyway- there are teams of lawyers working 100 hour weeks helping them devise strategies to legally get the lower rate, regardless of what they call it ostensibly
just look at what renaissance reportedly did, there was a whole expose in the news a few years ago how they got the lower capital gains rate applied despite trading at much shorter time-frames
there are probably other firms/family offices doing the same thing, just more opaque & niche
by the time something gets reported in the news for all to see, eg. libor rigging, currency manipulation, precious metals smashing the close, Treasury bond spoofing, it's already an open, well-known secret for everyone in the industry within 6 degrees of distance to them
just look at what renaissance reportedly did, there was a whole expose in the news a few years ago how they got the lower capital gains rate applied despite trading at much shorter time-frames
there are probably other firms/family offices doing the same thing, just more opaque & niche
by the time something gets reported in the news for all to see, eg. libor rigging, currency manipulation, precious metals smashing the close, Treasury bond spoofing, it's already an open, well-known secret for everyone in the industry within 6 degrees of distance to them