I know...Believe me - I find it very hard to believe that any degree program can teach you how to successfully trade. I just meant that some of the course material looked interesting....
Market Wizards
- Thread starter OneHipCat
- Start date
I know...Believe me - I find it very hard to believe that any degree program can teach you how to successfully trade. I just meant that some of the course material looked interesting....
Usually the reason you quote someone is because the magnitude of their success or credibility validates the point, not because you worship them.
So you lump them all together as losers because of one blowup (Dennis) even though others are running 5 to 10 billion each and still making new equity highs, you write off 20+ year track records as "luck," and then you turn around and idolize Buffett for basically doing a buy and hold of America.
You're absolutely right, why should we get any inspiration or insight from those brainless market wizards dumbasses.
I'm gonna go buy a farmhouse in Omaha and load up on KO. Right after I brush up on my folksy homespun wisdom.
According to Mike (quoted above), there would be a luck factor to many traders.
As quoted by Mike (although without quoting any reference or source), luck could play an important role to make tons of money.
This quote (from Mike as well) reminds us to use our brains (who would say not to?) for learning new knowledge, analysing others' quotations/ thoughts, and making decisions. Otherwise, ...
After reading so many different opions from this thread, I'm now starting to believe there perhaps would be really a luck factor among ALL mangers, since the individual performance between managers (of the same/similar investment vehicles) can have very diversified results.
An investor could have invested into Soros' or PTJ's funds with multiple times returns, but another investor at the same time might have chosen another manager possibly with negative returns during the same period.
If All (similar) managers having the similar past performance records can generate similar results (within certain standard deviations), the luck factor may be insignificant.
However, judging from the historical fact that only very limited number (or small percentage) of managers could produce outstanding performance well known to general public (and many vanished managers were not known to us today), my guess for now would be there could be a luck factor existing, whether with the managers or the investors.
An investor could have invested into Soros' or PTJ's funds with multiple times returns, but another investor at the same time might have chosen another manager possibly with negative returns during the same period.
If All (similar) managers having the similar past performance records can generate similar results (within certain standard deviations), the luck factor may be insignificant.
However, judging from the historical fact that only very limited number (or small percentage) of managers could produce outstanding performance well known to general public (and many vanished managers were not known to us today), my guess for now would be there could be a luck factor existing, whether with the managers or the investors.
Quote from Brandonf:
I think as long as I continue to outperform they won't mind much
I would think each manager's mindset/ style/ methods/ strategies of trading would have already inherited the DNA of her/his profitability/ risk profile.
I wonder striving for the best to outperform others (including oneself) could be a rather risky issue, just a thought.
People in general will always be intelligent after it happens.....money will always follow performance...this is human nature...
The people who select managers are lucky if they receive above average returns....
Sometimes the managers provide attractive returns without luck....sometimes with luck...ie the managers of sector funds...
The largest safekeepers of money which have to have returns for its pension holders such as Calpers...will often pick management styles that are now out of favor...hoping to be in favor in the next 5 years...Most less sophisticated investors will pick the best more recent annual performances...
What is important to safekeepers such as Calpers is that the manager is consistent within the style...and doesn't veer off track because the style is currently not in favor....The ordinary investor will almost never do this...why?...performance sells....
A daytrader who performs consistently let's say for 200 days is not lucky...this reflects true ability....
Whatever...its Sunday....
The people who select managers are lucky if they receive above average returns....
Sometimes the managers provide attractive returns without luck....sometimes with luck...ie the managers of sector funds...
The largest safekeepers of money which have to have returns for its pension holders such as Calpers...will often pick management styles that are now out of favor...hoping to be in favor in the next 5 years...Most less sophisticated investors will pick the best more recent annual performances...
What is important to safekeepers such as Calpers is that the manager is consistent within the style...and doesn't veer off track because the style is currently not in favor....The ordinary investor will almost never do this...why?...performance sells....
A daytrader who performs consistently let's say for 200 days is not lucky...this reflects true ability....
Whatever...its Sunday....
I use to say it's different to make a cake at home and to make a cake industry. The cake at home is usually more good. So for me it is not astonishing that an individual trader / little hedge fund manager can do better than a big hedge fund manager because it is not the same scale process. The individual trader / little hedge fund has no liquidity problem relatively. A big hedge fund will have probably have to bluff a market so that at his scale he is a bit like a poker player whereas the individual trader is more like a roulette player because the market is so big compared to him. This is not the case for big hedge funds who are really playing a zero sum game one against the other so that necessarily some have to explode for others to win. At least then the smaller players can then mock them when it happens.
Quote from OddTrader:
I would think each manager's mindset/ style/ methods/ strategies of trading would have already inherited the DNA of her/his profitability/ risk profile.
I wonder striving for the best to outperform others (including oneself) could be a rather risky issue, just a thought.
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Quote from fkeane:
Neiderhoffer and many others, however, claim that financial history is non-stationary. To borrow on one of his analogies, its as if the urn containing thousands of red and white marbles has an elf at the back, replacing the mix of marbles. So when you sample the data to figure out its patterns (what percentage each of white or red marbles in the population) you will be right for a while, but in time the population changes. Furthermore, you will lose money for a while because you wont know if something has really changed or if you are just experiencing normal volatility.
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Think about that a little bit. Dennis Richmond blew up twice following periods of great success. The turtles all saw their returns deminish after 4 years. It would seem to me that system traders are especially vunerable to this concept of non-stationary markets, emphasised by the fact that trading these systems neccessites a blind faith during draw down periods that the past market behaviour supporting the system's viability is still persisting.
My fear (as an aspiring system developer) is that this non-stationary attribute of the market is becoming more volitile, giving rise to smaller window periods of profitability for any given system. The huge influx of traders utilising system development (see bottom of this link: http://www.nypost.com/business/23134.htm) poses a logical rationale supporting that profit opportunites will be identified and exploited away much more quickly than in the decades past where a handful of revoutionary traders like Dennis
were doing the hard slog of back testing manually. The Turtles had 4 years of phenomanal returns, that thereafter disapated somewhat, and this was perhaps not by coincidence concurrent with increasing acceptance of systematic trading methods and more sophisticated and powerful analytical tool (the trusty 'puter).
I would love to hear from Curtis or any other previoulsly successful system traders regarding the impact proliferation of system development has had on potential profitability. Seems to me that the type of trader like Paul Tudor Jones might just have the advantage over the system trader now - for him the market can be as non-stationary as the market likes because of the forward looking approack of reading the macro-environment.
Sam
Quote from fkeane:
Neiderhoffer and many others, however, claim that financial history is non-stationary. To borrow on one of his analogies, its as if the urn containing thousands of red and white marbles has an elf at the back, replacing the mix of marbles. So when you sample the data to figure out its patterns (what percentage each of white or red marbles in the population) you will be right for a while, but in time the population changes. Furthermore, you will lose money for a while because you wont know if something has really changed or if you are just experiencing normal volatility.
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Think about that a little bit. Dennis Richmond blew up twice following periods of great success. The turtles all saw their returns deminish after 4 years. It would seem to me that system traders are especially vunerable to this concept of non-stationary markets, emphasised by the fact that trading these systems neccessites a blind faith during draw down periods that the past market behaviour supporting the system's viability is still persisting.
My fear (as an aspiring system developer) is that this non-stationary attribute of the market is becoming more volitile, giving rise to smaller window periods of profitability for any given system. The huge influx of traders utilising system development (see bottom of this link: http://www.nypost.com/business/23134.htm) poses a logical rationale supporting that profit opportunites will be identified and exploited away much more quickly than in the decades past where a handful of revoutionary traders like Dennis
were doing the hard slog of back testing manually. The Turtles had 4 years of phenomanal returns, that thereafter disapated somewhat, and this was perhaps not by coincidence concurrent with increasing acceptance of systematic trading methods and more sophisticated and powerful analytical tool (the trusty 'puter).
I would love to hear from Curtis or any other previoulsly successful system traders regarding the impact proliferation of system development has had on potential profitability. Seems to me that the type of trader like Paul Tudor Jones might just have the advantage over the system trader now - for him the market can be as non-stationary as the market likes because of the forward looking approack of reading the macro-environment.
Sam