Money management business paradoxes

P

PBS

In trading, there are many things that are completely illogical. This is also certainly true in money management business.

Take Melvin Capital: lost more than 20% in one month last year - they got "reloaded" by investors. Now they lost again - yet still are in the business charging their management fees.
Take Superfund Group (managed futures fund based in Europe): they charge 4.5% subscription fee (!) plus 2.0% early redemption fee if you withdraw the money earlier than 12 months after paying them into the fund. They also charge 4.8% (!!!) management fee plus 20% incentive fee. Funnily enough, this 4.8% is presented as 0.4% pm. in their documents - I got tricked myself when I first saw "0.4% number I thought that is a low annual management fee but this is per month!

How do these people raise all this capital? Who gives them money to manage? I really come to a conclusion that trading your own money vs OPM is a completely different ball game. So sad...
 
Who gives them money? pension funds, university endowments, fund of funds, governments all of which are run probably by someone not so smart who is more than willing to listen to the experts so as to avoid responsibility.

Best is in fixed income asset management where comparing to a benchmark is a big thing. There are so many benchmarks it's hilarious and even if you lose money you can say you beat the benchmark
 
OPM traders charge fees to afford paying the lawyers, not only for their benefits. With some bad luck they meet an investor who will fill their lifetime with law suits.
 
PBS said:
In trading, there are many things that are completely illogical. This is also certainly true in money management business.

Take Melvin Capital: lost more than 20% in one month last year - they got "reloaded" by investors. Now they lost again - yet still are in the business charging their management fees.
Take Superfund Group (managed futures fund based in Europe): they charge 4.5% subscription fee (!) plus 2.0% early redemption fee if you withdraw the money earlier than 12 months after paying them into the fund. They also charge 4.8% (!!!) management fee plus 20% incentive fee. Funnily enough, this 4.8% is presented as 0.4% pm. in their documents - I got tricked myself when I first saw "0.4% number I thought that is a low annual management fee but this is per month!

How do these people raise all this capital? Who gives them money to manage? I really come to a conclusion that trading your own money vs OPM is a completely different ball game. So sad...
More...
%%
SOME are much better @ ads/marketing than % gain for investors/LOL
Wisdom is profitable to direct.....................................................................................................Actually an early redemption fee /gate makes sense\NEVER get a good price for a house on fire or rush job usually\ or even panic sellers..............................................................FEW will do what carl Ichan did in 2008/he allowed redemptions but got it from another fund /cause he did not want to sell in 2008/amen
 
Even knowing what you know, it may surprise you to know just how many funds, family offices and etc are out there where the people managing the money have literally no clue how to trade.

Some of the core concepts I've seen people using to trade millions and millions of dollars blows my mind and despite losing.. they keep on putting on trades and do not get the capital pulled from them.
 
Concinnity said:
Even knowing what you know, it may surprise you to know just how many funds, family offices and etc are out there where the people managing the money have literally no clue how to trade.

Some of the core concepts I've seen people using to trade millions and millions of dollars blows my mind and despite losing.. they keep on putting on trades and do not get the capital pulled from them.
More...

there’s a difference between trading and investing. And investing in other managers is a different skill set all together.
 
newwurldmn said:
there’s a difference between trading and investing. And investing in other managers is a different skill set all together.
More...


Yeah, that is a good point. Not that my view point is the only one that matters of course not, but at the same time I think we can agree the point to being in the financial markets is generally speaking is to make, not lose money. So, if you're managing and investing 20+ 50+ million dollars and losing money consistently, that's still pretty garbage regardless if they want to say "Oh I am investing it though, not trading it!". It's like ok..... point taken but you're still losing money. I could care less if someone is investing or trading my money, when it comes down to it, the bottom line are we making money or not?


EDIT: Also, to me I don't see a huge disconnect between investing and trading personally. The same things that work on smaller times, will work on larger time frames, particularly if you are taking a fractal approach to the markets. So, just for me personally saying you're "investing in it" based on fundamentals as an excuse for losing money, doesn't hold much water (just to me personally) particularly if we're talking about stocks / equity futures.
 
Last edited:
isabellavillareal said:
Why would the same thing that works on short timeframes work on long timeframes? Does that seem likely or has there ever been any evidence for it?
More...


How could it not though? If you believe the markets move 100% random, why wouldn't something that works on a smaller time frame work on a larger time frame?

If you believe trading the markets from a fractal standpoint gives you an edge, why wouldn't something that works on a smaller time frame work on a larger time frame?

I trade with multiple charts everyday. Having extremely large charts open, down to pretty small charts. The signals and patterns that generate are working the same on every chart, the only difference is the expectation of the move (ATR as an example to measure this). The larger chart that triggers something, the larger the ATR move that is expected.

I've backtested(over 20+ years of data), forward tested / live traded based on this. Certainly not rich yet, far from it nor do I have a huge portfolio to post for you. But making good progress and starting to turn the corner, getting things refined, looking to streamline everything more and even build multiple automated features / bots to make things cleaner.
 
Well usually when you are in a trade you think that the return is superior to not being in it. Finding times when this is true looking backwards becomes more difficult when the number of random events increases as time passes. The evidence is the signals are extremely weak and decay very fast and you have to go so far into the tail that they occur at extremely low frequency. So to make money you have to have a great number of signals and low holding times
 
You must log in or register to reply here.
Back
Top