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

Quote from intradaybill:

I think this is the purpose of this forum. I have a few questions:

- What was your Sharpe Ratio?

- Profit factor?

- Win rate?

- max DD?

If you are willing to do so, you can attach a list of your trade returns and I will run statistics that tell whether your returns were achieved by luck or skill. I can do that privately if you wish so. I do it out of curiocity and for fun.
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Hi Bill,

I have included the monthly returns for the last 10 months for my main account in which I have 90%of my positions. This was taken from my brokerage account portfolio analysis together with a comparison to the S&P 500. Before May 2010 I was using a different broker that doesn’t give me that analysis.
After analyzing the data (this was actually the first time I did that...) I noticed the following
1) The declining months have a loss similar approximately to the S&P 500 while the increasing months are substantially better
2) Since July there seems to be less correlation to the S&P 500

Notice of caution, as I posted earlier I keep redefining my strategies, so the performance for the last 10 months might not be that much relevant now. The second thing I would note is that the value for this analysis is calculated at night by my brokerage, and the values at that time can be different then by the market close. (I have seen sometimes values go up or down by as much as 10-20k after market close because they where pricing “options” differently). Right now I am writing down the numbers at the end of the month when the market closes so I have a more accurate track record.

So take it with a grain of salt….


May 10 -9.19% (S&P 500 -8.21%)
Jun 10 -6.07% (S&P 500 -5.38%
Jul 10 +22.45% (S&P 500 +6.88%)
Aug 10 -3.02% (S&P 500 -4.74%)
Sep 10 +0.54% (S&P 500 +8.76%)
Oct 10 +16.99% (S&P 500 +3.69%)
Nov 10 +7.90% (S&P 500 -0.23%)
Dec 10 +6.19% (S&P 500 +6.53%)
Jan 11 -3.24% (S&P 500 +2.26%)
Feb 11 +8.96% (S&P 500 +3.20%)
 
I am in a similar boat as Lazar206. I have about 660k right now and did pretty well in the last several years.

2008 -21%
2009 209.6%
2010 66.8%

Cash account, no margin. only investing in undervalued stocks, the financial crisis presented a lot of opportunities.

I am considering managing OPM, but there seemed opposite opinion on this. fee-only RIA route maybe easier to start with, but I don't know if it worth it.
 
Quote from zouy2000:

I am in a similar boat as Lazar206. I have about 660k right now and did pretty well in the last several years.

2008 -21%
2009 209.6%
2010 66.8%

Cash account, no margin. only investing in undervalued stocks, the financial crisis presented a lot of opportunities.

I am considering managing OPM, but there seemed opposite opinion on this. fee-only RIA route maybe easier to start with, but I don't know if it worth it.
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Great numbers. Keep me posted what you decide to do...
 
Quote from zouy2000:

I am in a similar boat as Lazar206. I have about 660k right now and did pretty well in the last several years.

2008 -21%
2009 209.6%
2010 66.8%

Cash account, no margin. only investing in undervalued stocks, the financial crisis presented a lot of opportunities.

I am considering managing OPM, but there seemed opposite opinion on this. fee-only RIA route maybe easier to start with, but I don't know if it worth it.
More...

I'd say keep investing. Late 2008 and 2009/2010 were excellent for value investing, once in a generation buys there. You want to see how you will perform in a fairly valued market trending steadily higher - if you can outperform in that environment then your approach could have merit. And you want to see how your sell discipline and risk control works when the bull ends and the next bear market arrives.

IMO you need to invest or trade over a full cycle - bull peak to bull peak, or bear low to bear low, before knowing how good you might be. Remember to adjust returns for risk too. Maximum peak to valley equity drawdown compared to compound annual rate of return is the key figure. If you can compound at greater than your max drawdown over a cycle, that is very good.
 
Thanks Cutten for the advice. I admit that the last serveral years' phenomenal returns probably will not be repeatable for a while. Basically my approach is selecting stocks using fundamental analysis(Warren Buffett and Peter Lynch style) and adjust positions(scaling in/out) as the market moves. I think this strategy should give at least reasonable returns in a normal market, excellent returns in a volatile market. I am implementing an auto-trading program to handle the position sizing aspect as I found it could enhance the risk-adjusted return and half the maximum drawdown. I am still in wait-and-see mode, thanks again for your advice and cool down my head a little bit. Last serveral year's good returns make my head hot once for a while.
 
Quote from zouy2000:

I am in a similar boat as Lazar206. I have about 660k right now and did pretty well in the last several years.

2008 -21%
2009 209.6%
2010 66.8%

Cash account, no margin. only investing in undervalued stocks, the financial crisis presented a lot of opportunities.

I am considering managing OPM, but there seemed opposite opinion on this. fee-only RIA route maybe easier to start with, but I don't know if it worth it.
More...

How has your preformance been so far this year?
 
The performance so far this year is not good. no gain, no loss either as I am busy developing auto-trading program with Amibroker and my portfolio is in defensive mode which only holds a couple of high dividend stocks. I am still contemplating what to do for the next few years, but for now the rational thing for me to do is probably to perfect my trading methodology and make target of 50% gain per year.

Lazar, have you considered RIA route? I have a IB Family and Friends advisor account, I consider it is much simpler than hedge fund structure and you can also trade other people's money like a simple account.

let me know how your hedge fund goes.
 
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