Schadenfreude Warning: "Karen the Supertrader"

[Maverick74]

Then, how did he get away from being wiped out if he took so much risks and how I can learn form him and you?

Thanks.

I never said he wasn't a good trader. He was VERY selective and he did a good job of hedging his exposure. He certainly took concentrated positions but rarely. He went long periods of time without trading much. He wasn't in there buying and selling everyday on every moving avg crossover. I would have to say though he is an anomaly. You can have that in any data set. Jake Arrieta is an anomaly. You can't model yourself after them. I think global macro traders have a lot of unique advantages if they are adept traders. You can find things that are not all correlated to each other. Soros is and was very good at that. And to be fair, if memory serves me right, early on his career Soros was very very close to being wiped out completely. He got "lucky" and avoided it.

While the above is just a small sample of Soros career, over this 13 year stretch he did no better then the S&P 500 on a risk adjusted basis.

 

[Maverick74]

Does that mean us average/small retail traders are doomed to make very modest return even if we try hard?

Now you are speaking statistics. When you say "avg retail trader" the key word is avg. Average traders of any sort make avg returns, hence the word avg. So yes, to answer your question, the avg retail trader will earn a modest avg return over time that will more then likely under perform the overall market after adjusting for taxes and fees.

 

[OptionGuru]

I still don't quite understand exactly how she did her accounting of profits and losses. Can some of you explain?

From what I gather she would sell options towards the end of the month and tack the premium onto the realized p/l column. The true value was in the unrealized p/l column. The fund charged a monthly fee if they made a profit - based on realized gains.

Think of it as "trade adjustment". Eventually the deck of cards will collapse.

 

[neke]

... she didn't particularly strike me as the malevolent "gonna fuck you all over" type.

Why? because she is a woman? I would imagine that even Madoff's strategy didn't start with trying to dupe investors. At some stage it got way beyond redemption, and you keep trying/hoping to defer the inevitable doomsday.

 

[ScalperJoe]

That is incorrect. The scheme trades' only function was to carry over the loss and they were either breakeven or generating a slight loss (it is mentioned in the complaint), depending on how well they executed them. Also, most likely they tied up money AUM, so they had less money to make up the loss...

Ok, yes, that's correct. The function of the "scheme trades" was to create the illusion that she was owed her 20% fees. My guess is the SEC will make this a focal point of the trial.

 

[ScalperJoe]

It's absolutely shocking to me how many otherwise intelligent people simply don't understand this. But there is this crowd of people on ET that use phrases like "all I want to do is make 10% a month" doing this or that. It's laughable. These people have no effing clue...

No, what's laughable is the high net worth accredited investor who doesn't seem to understand this, yet forks over a minimum $250,000 to invest in her fund. It has nothing to do with people on ET.

 

[lawrence-lugar]

No, what's laughable is the high net worth accredited investor who doesn't seem to understand this, yet forks over a minimum $250,000 to invest in her fund. It has nothing to do with people on ET.

An incredibly high number of high net worth individuals are rather hugely naive about investments...they just know they have to generally do it. -- so they fork over their money to a hedge fund that sounds prestigious and puts up a nice convincing presentation.

 

[der_kommissar]

No, what's laughable is the high net worth accredited investor who doesn't seem to understand this, yet forks over a minimum $250,000 to invest in her fund. It has nothing to do with people on ET.

That's why I'm just as interested in the promoters of this junk as I am with her obvious screw-up's...It's not as if someone just finds these millions of dollar's without a whole bunch of connections and people going to bat for her...(I will admit that I'm not completely familiar with the entire story and I could/should probably read more about the evolution of this scam.)

 

[ScalperJoe]

An incredibly high number of high net worth individuals are rather hugely naive about investments...they just know they have to generally do it. -- so they fork over their money to a hedge fund that sounds prestigious and puts up a nice convincing presentation.

Yes, they may be naive, however if they spread out their investments over various funds, various asset classes, some do just fine. That doesn't mean they won't get taken. The complaint's focal point is regarding high water mark, disclosure, and the ability to generate an incentive fee with proper disclosure of beating the high water mark. The trades itself weren't fraudulent, but the SEC will claim they were based on her intentional desire to generate the incentive fees without the proper disclosure of the risks involved.

 

[ScalperJoe]

That's why I'm just as interested in the promoters of this junk as I am with her obvious screw-up's...It's not as if someone just finds these millions of dollar's without a whole bunch of connections and people going to bat for her...(I will admit that I'm not completely familiar with the entire story and I could/should probably read more about the evolution of this scam.)

I would not be surprised if any of the investors will try to sue TD Ameritrade for promoting her services and putting her on a pedestal for so many years.