My account value reaches $600,000 for the first time; launching incubator hedge fund

AK100 · Feb 3, 2011

Quote from jem:

This advice might not be for everyone... but in my experience and I had some as an attorney and a guy who owned a trading llc where my business partner was bragging - promoting his ass off on the internet, the best defense to the regulators is proof that your statements are true.

I suspect the regulators leave you alone if you you are telling the truth and not cheating anyone. (because to some degree their regulations impinge upon constitutional rights)

The problem is if you then wind up losing money and your investors get attorneys.

Good point and I believe you're right.

They will also not bother you must if you don't have access to the cash so if a broker opens the account for the client and you just trade that then it's hard for you to run off with client money.

Rodney King · Feb 3, 2011

Quote from Cache Landing:

Certainly, your $100K first year cost statement is a slight exaggeration though. More in the $50K range is realistic.

-$25K fund setup
-$10K audit
-$5K tax prep
-$10K administrative

Those figures are all lowball, bargain-basement levels. Multiply each by about 2x for name-brand service providers, such as Big Four auditors... And you're assuming you're spending $0 on an in-house employee to shuffle the paper and oversee / interact with the providers.

lazar206 · Feb 3, 2011

Quote from Bowgett:

This is not track record. This is bragging

What do you mean by saying its bragging?

piezoe · Feb 3, 2011

Congratulations Lazar, you've done quite well. Up about 167 %, while the S&P rose less, at about 155%. I had to guess, of course, because you did not give us the exact date of inception. I think I used S&P = 850 to start. In any case you've beat the S&P over the last two years and that's good. A lot of fund managers can't say that.

Keep working on it, and I would say that if you can maintain a similar record average relative to the S&P for let's say the next ten years or so, you might well be in a position to start managing other peoples money. You'll certainly want to go through at least one bearish period to test your mettle in that kind of market environment. Good luck to you and keep up the good work, and stay a serious student of the market.

Runningbear · Feb 3, 2011

Lazar,

I'm interested in this incubator concept for proving your performance. How do you go about it? Who audits your results and where are they published?

I think its a great idea for successful traders that want to take the set to money management.

Runningbear

piezoe · Feb 3, 2011

Quote from piezoe:

Congratulations Lazar, you've done quite well. Up about 167 %, while the S&P rose less, at about 155%. I had to guess, of course, because you did not give us the exact date of inception. I think I used S&P = 850 to start. In any case you've beat the S&P over the last two years and that's good. A lot of fund managers can't say that.

Keep working on it, and I would say that if you can maintain a similar record average relative to the S&P for let's say the next ten years or so, you might well be in a position to start managing other peoples money. You'll certainly want to go through at least one bearish period to test your mettle in that kind of market environment. Good luck to you and keep up the good work, and stay a serious student of the market.

Opps, not 155%, 55%. You won't have to maintain a "similar record" over time, but just consistently beat the S&P by a good bit. Let's see how you do in 2011.

lazar206 · Feb 5, 2011

Quote from piezoe:

Opps, not 155%, 55%. You won't have to maintain a "similar record" over time, but just consistently beat the S&P by a good bit. Let's see how you do in 2011.

Thanks for your encouraging words. Offcourse 2 years of a record is not enough, however 5 years might be a different story. As I said I hope to update my results monthly.

tonyalva · Feb 5, 2011

Truth be told. Performance is but a tiny factor in raising capital. If at all. I point you toward the multiple hedgees who blow up then raise twice the amount as they had prior to blow up. Seriously, talking about performance is for the naive wannabes. Everyone has great performance otherwise they wouldn't be contemplating starting an incubator (WTF?) fund. Sorry for the dose of reality. Now go back to play.

EDOptionsMMer · Feb 5, 2011

Quote from lazar206:

I reached a new milestone last week when my account value reached $600,000. I am launching an incubator hedge fund now, so if/when I decide to go for a full hedge fund I should have a track record. The initial account value of the fund will be $100,000; however I will be adding 3,000 each month. I plan on posting the returns on the fund on this thread on a monthly basis at the end of each calendar month.

Looking forward for your advice and comments.

What products/asset classes are you trading?

lazar206 · Feb 6, 2011

Quote from Zr1Trader:

Go buy undervalued condo or two with half your money and rent them out for 10 years then sell em. Convert your "points" to hard assets. Until then they are just "points" in a game that you may or may not forfeit back to the market. Really Relize your gains if that makes any sense. Also, just because I can turn 2000 dollars into 10,000 or 200,000 into a mill doesnt mean I should run out and start a hedge fund.

I am a big fan of diversification and I would agree that one should not hold all (or the majority) of his money in the market. I own 2 condos already.
Also as explained on my original post, I am not interested in launching a hedge fund now, I am just launching an incubator hedge fund, so if in 3 years I decide to launch a fund I should have a track record.