Starting a fund / raising capital

Quote from Vix-Trader:

I don't think anybody is doubting you made those returns. The thing people are doubting is what kind of risk you took on to achieve them, and without knowing anything about you or your trading strategy we can realistically surmise that it's probably significant. Either that, or it's directional and you simply are currently on the correct side of the trades.

So nobody is insulting you or questioning your current success. I congratulate you on it, good job in the last 3 years. However, if you're under the impression that you can make 50% a year indefinitely, I have news for you... :)

As far as starting a fund and raising capital. I'm just one guy with an opinion, but I'd never give money to someone who said they can make 50% returns annually.
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I only posted the screen shots because several people asked for them, clearly because they doubted the returns.

I have never commented on the level of risk I took to achieve them, but I wouldn't mind answering more questions along those lines if asked.

I would just point out right now that a regression between my monthly returns and the monthly returns of the S&P500 indicate next to zero correlation.

Also I never suggested I believe long term returns at such a high level is sustainable. I actually have gone out of my way to point out that they are unlikely to be sustainable. I find it annoying that you suggest I believe otherwise when I have explicitly stated this on multiple occasions.
 
I don't have time to quote mine 57 pages, but yes you did state several times you think you can sustain your results.

"It is my belief that I can sustain my results and use them to raise capital in the foreseeable future."

"But surely if I sustain these results for 5 or 7 years, then raising several mil should be no problem?"


Just from a single post, never mind the other hundred or so times you said similar things. Anyway, no point doing the you said this and that, this isn't a debate thread.

I wish you luck in your endeavor. I will give you some advice though. You really need to work on the way you speak. You sound extremely unsure of yourself so you're definitely going to have to work on that. With decent results your success may rest on how you're able to speak to potential clients.

If you couple a lack of confidence in your words with 50% annual returns, it really starts to sound a lot like dumb luck. Again, NOT saying it is, but that's certainly the impression people could be left with.

Good luck
 
How do you choose “size” on a strategy that seems to perform extremely well at least historically? One would think that if you used more leverage and trade bigger size your return would be even higher. So what’s the balance/formula you use?
 
Quote from doublet83:

YTD up 1.5mm, representing a 139% return. Overall another excellent year so far, although these returns are unlikely to be sustained.

October was a relatively difficult month, down 0.7%, and the first down month in a year and a half.

Screenshot represents the main account only.
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If you look at my recent post here just a few days ago, you will see it doesn't have that many works, and out of the few words it does have, I clearly state these returns are unlikely to be sustained.

I don't know where you're quoting from or what I might have been referring to at any point in history. I clearly believe I can continue to outperform a passively managed strategy by a significant margin on a risk adjusted basis or else I wouldn't be in this business.

Also I don't know where you get 50% from, I've been compounding over 100% over the past 4 years.

In any case, you are on ignore.
 
Hi Doublet,

Good job on the trading, if you keep this up in 5-10 years you will be a very rich man....so why bother with the hassle of a fund? for the praise? fame?

I am not sure exactly how it is,, but its got to be very costly, stressful and even more time consuming than trading on your own....

just keep it up and you will be more than fine...or maybe find 1 or 2 rich investors who could pool your money in a way that is not like a fund....but that would be difficult unless its not family or someone very close.
 
Quote from macintash:

How do you choose “size” on a strategy that seems to perform extremely well at least historically? One would think that if you used more leverage and trade bigger size your return would be even higher. So what’s the balance/formula you use?
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Answering this question is more complicated than I care to fully go into since I have a few different strategies with distinct time frames, risk exposures, and sizing parameters.

I will focus on my medium to long term fundamental long short strategy which is my main focus and the biggest component of returns.

Here, I average around 140% gross long, 80% gross short, and 60% net long over the past two years. Typically, I do like to take a big bet on a high conviction plays. I only have about one of these positions a year, and at times I approached a 30% position in my top name. Other than this, exposure quickly drops off to about 10% exposure to the 2nd biggest position, with about 60 positions total. Most positions are only 2% positions. Additionally, I would monitor net exposures to sectors and by investment characteristic . So I'm conclusion, I'm feel I'm taking quite a bit of risk with my concentrated bet, although philosophies differ on this approach, and I am of the belief that the inherently high risk associated with the size of the bet is mitigated by the amount of research done and conviction in the investment.

Other than being very aggressive with a few big bets, I am fairly diversified with more moderate risk exposures. When I strip out my 2 biggest and most successful investments this year, I have had a well diversified portfolio of 60 or so names that returned 78% this year despite only being about 30% net long. So I feel very good about that and might slightly increase size on that piece.
 
Quote from doublet83:

Also I don't know where you get 50% from, I've been compounding over 100% over the past 4 years.

In any case, you are on ignore.
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I wasn't insulting you in the least, so I really don't know why you get so defensive and angry. Not only do you speak with the confidence of a person who began trading 3 months ago, but you talk to people with the patience and respect of a mean drunk. Not exactly a winning combination for learning sales and starting a fund.

You can ignore me if you like, but just remember that many traders have warned you. It is laughable that you think you achieved 100% annual returns for 4 years straight and weren't taking epic risks to achieve it. The fact that you aren't experienced or objective enough to see the inherent risks doesn't mean they aren't there.

Keep those returns up, and it won't be that long before you own the entire value of the stock market...
 
Quote from doublet83:

Answering this question is more complicated than I care to fully go into since I have a few different strategies with distinct time frames, risk exposures, and sizing parameters.

I will focus on my medium to long term fundamental long short strategy which is my main focus and the biggest component of returns.

Here, I average around 140% gross long, 80% gross short, and 60% net long over the past two years. Typically, I do like to take a big bet on a high conviction plays. I only have about one of these positions a year, and at times I approached a 30% position in my top name. Other than this, exposure quickly drops off to about 10% exposure to the 2nd biggest position, with about 60 positions total. Most positions are only 2% positions. Additionally, I would monitor net exposures to sectors and by investment characteristic . So I'm conclusion, I'm feel I'm taking quite a bit of risk with my concentrated bet, although philosophies differ on this approach, and I am of the belief that the inherently high risk associated with the size of the bet is mitigated by the amount of research done and conviction in the investment.

Other than being very aggressive with a few big bets, I am fairly diversified with more moderate risk exposures. When I strip out my 2 biggest and most successful investments this year, I have had a well diversified portfolio of 60 or so names that returned 78% this year despite only being about 30% net long. So I feel very good about that and might slightly increase size on that piece.
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You say, "I do like to take a big bet on a high conviction plays" which makes sense. My question would be, how big? and what kind of mechanism do you have to protect if it turns out that it was not such a good trade? (might not happen often, but might happen once in a while).
 
Quote from doublet83:

Answering this question is more complicated than I care to fully go into since I have a few different strategies with distinct time frames, risk exposures, and sizing parameters.

I will focus on my medium to long term fundamental long short strategy which is my main focus and the biggest component of returns.

Here, I average around 140% gross long, 80% gross short, and 60% net long over the past two years. Typically, I do like to take a big bet on a high conviction plays. I only have about one of these positions a year, and at times I approached a 30% position in my top name. Other than this, exposure quickly drops off to about 10% exposure to the 2nd biggest position, with about 60 positions total. Most positions are only 2% positions. Additionally, I would monitor net exposures to sectors and by investment characteristic . So I'm conclusion, I'm feel I'm taking quite a bit of risk with my concentrated bet, although philosophies differ on this approach, and I am of the belief that the inherently high risk associated with the size of the bet is mitigated by the amount of research done and conviction in the investment.

Other than being very aggressive with a few big bets, I am fairly diversified with more moderate risk exposures. When I strip out my 2 biggest and most successful investments this year, I have had a well diversified portfolio of 60 or so names that returned 78% this year despite only being about 30% net long. So I feel very good about that and might slightly increase size on that piece.
More...


I think what you have explained above is at the core of the fund raising issue. It seems as you stated, the bulk of your returns come from longer term positions. The fact that you have a diversified portfolio of 60 names. (Btw, after diversifying to about 12 names, the additional benefit to risk that each new diversification brings is exponentially reduced, but you probably know this). In other words, the more names you add to your portfolio the more likely your returns will start to correlate with the larger indexes (which is exactly with a diversified portfolio is, duh).

Unless these are positions that are pushed into profit as a result of some kind of earnings release (post earnings/news gap and the following price drift is one strategy that comes to mind) and your analysis/research has a direct affect on the outcome of the trade (ie. related to the news, etc.), you are essentially creating beta and there is plenty of that out there already. This would essentially mean that a good portion of your returns are essentially a leveraged version of the SP500.

I am making some assumptions, guesses here since I do not know all the details of your strategies. So forgive me if I misspoke.

Fund managers love fundamental, value strategies during bull markets as these are super scalable. Interestingly, the most scalable 'strategies' are those with the loosest risk management, as hard stops come at a liquidity cost.

But in terms of marketing, if the above is correct, there is little to differentiate yourself from the rest of has become an overcrowded market of fund managers.

Alpha always come at the expense of liquidity, But it carries value in the money management world.

So the question is, how much alpha are you creating and can you prove it to prospective clients without divulging too much information?
 
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