And the reason I wouldn't lie about my performance is because an anonymous board isn't as anonymous as you think. I'd be in deep shit if I came out here, lied about my performance, and then get caught a few years down the road. I'd be done. My license would be gone and I'd be banned from trading. You actually think I'd take an idiotic risk and destroy my career like that so I can look like some sort of hero on a MB? Think about that.
Starting/Working for a Hedge Fund
- Thread starter ProfitTakgFool
- Start date
I feel compelled to jump in here....
Almost every day for over 8 years, I come on this board and sift through s%*t like "Urgent Message from whoever..." or "Watch me turn $1 into $500,000 in 28 days..." or "IB sucks..." or whatever looking for nuggets like PTF has been kind enough to post.
I just finished setting up a commodity pool, and I will tell you that this thread helped me in getting started in that endeavor. In that time, PTF was gracious enough to answer about 10 private messages all filled with very personal questions about his fund, how he trades, what he pays in commissions, etc. that I most likely wouldnt have answered myself. Since then, I have had the priveledge of paying over $15k to a lawyer, an accountant, my great State of Texas, the First State of Delaware, and the cbot, and I got off cheap.....
And what have all those people told me that conflicts with anything PTF has stated about starting a fund..... nothing. The fact of the matter is, PTF is either a securities lawyer, tax advisor, and NFA regulator all rolled into one, or he has actually gone through the process of setting up a fund. And, last time I looked, the title of this thread was "Starting/Working for a Hedge Fund", not "Did PTF take 150K to 5MM in 2 years?" or "Does PTF know how to calculate the value of a Sharpe Ratio because he has an investment pedigree, etc...."
Through all of this, PTF has not asked for a single dime, not pimped his latest book on Starting Hedge Funds, not marketed his fund or used ET for a personal gain in anyway. He just posted relevant information for those interested in getting started with a fund.
I for one am grateful for the free help, and dont wont to see this thread die because the great keepers of ET (surf, cosine, etc..) want to invite the rest of ET scum(thats you HLJ) onto a thread they clearly had no interest in anyway...
Thanks for the help PTF, and to all those looking to start a fund, the info on this thread is both relevant and accurate.
- jeff
Almost every day for over 8 years, I come on this board and sift through s%*t like "Urgent Message from whoever..." or "Watch me turn $1 into $500,000 in 28 days..." or "IB sucks..." or whatever looking for nuggets like PTF has been kind enough to post.
I just finished setting up a commodity pool, and I will tell you that this thread helped me in getting started in that endeavor. In that time, PTF was gracious enough to answer about 10 private messages all filled with very personal questions about his fund, how he trades, what he pays in commissions, etc. that I most likely wouldnt have answered myself. Since then, I have had the priveledge of paying over $15k to a lawyer, an accountant, my great State of Texas, the First State of Delaware, and the cbot, and I got off cheap.....
And what have all those people told me that conflicts with anything PTF has stated about starting a fund..... nothing. The fact of the matter is, PTF is either a securities lawyer, tax advisor, and NFA regulator all rolled into one, or he has actually gone through the process of setting up a fund. And, last time I looked, the title of this thread was "Starting/Working for a Hedge Fund", not "Did PTF take 150K to 5MM in 2 years?" or "Does PTF know how to calculate the value of a Sharpe Ratio because he has an investment pedigree, etc...."
Through all of this, PTF has not asked for a single dime, not pimped his latest book on Starting Hedge Funds, not marketed his fund or used ET for a personal gain in anyway. He just posted relevant information for those interested in getting started with a fund.
I for one am grateful for the free help, and dont wont to see this thread die because the great keepers of ET (surf, cosine, etc..) want to invite the rest of ET scum(thats you HLJ) onto a thread they clearly had no interest in anyway...
Thanks for the help PTF, and to all those looking to start a fund, the info on this thread is both relevant and accurate.
- jeff
^um, did you apply to a prop desk at Goldman recently? Do you honestly think you get there purely through meritocracy?
Look, I have friends that will get spots at I banks. Most have connections. I'm objectively smarter than almost all of them finance wise, and have a decent pedigree. Yet I'm not getting on a prop desk unless I can wait to get in and pay for a Wharton MBA. Yet I outperform 99% of mutual fund managers with less risk. There's tons of guys like me who have carved out a little niche, who are truly passionate about trading/investing, yet simply won't get to those coveted spots as a trader or as a fund manager. Has nothing to do with ability. It has to do with grooming. Wall Street is not Silicon Valley; it's still very much an old boys club. Most guys I know got a spot through a. their parents or b. their Ivy League fraternity. Not because of their exceptional track record or their passion. Get real. If we were talking about chemical engineering, you'd have a point. People in finance aren't even that smart, save for a handful of quants.
Look, I have friends that will get spots at I banks. Most have connections. I'm objectively smarter than almost all of them finance wise, and have a decent pedigree. Yet I'm not getting on a prop desk unless I can wait to get in and pay for a Wharton MBA. Yet I outperform 99% of mutual fund managers with less risk. There's tons of guys like me who have carved out a little niche, who are truly passionate about trading/investing, yet simply won't get to those coveted spots as a trader or as a fund manager. Has nothing to do with ability. It has to do with grooming. Wall Street is not Silicon Valley; it's still very much an old boys club. Most guys I know got a spot through a. their parents or b. their Ivy League fraternity. Not because of their exceptional track record or their passion. Get real. If we were talking about chemical engineering, you'd have a point. People in finance aren't even that smart, save for a handful of quants.
1) Having connections is something you need to get a job. Having *lots* of connections is something you need to set up a hedge fund. Smart people know smart people. That's how things work.
2) Getting on a trading desk has not much to do with being 'smart finance wise' to start with, or knowing the theory. You learn that from experience, from scratch. You need specific aptitudes and heads of desks know better than you what these are and if you have them.
3) Patience and being able to take controlled risks (ex. financing your MBA) are among those aptitudes.
4) "Nothing to do with ability, about grooming, get real, not about passion" yadi yada is typical speech of someone who lacked the drive to demonstrate his ability in front of a prospective employer.
Here's some news buddy. Goldman Sachs don't recruit idiots to pay them tons of money just for fun. Nobody does. If you truly beat 99% of fund managers, knock on the door of the 98th perc. and show your track record, make your case, and get the job. If you fail at doing that, you'll fail at convincing institutional investors to invest a single penny in your fund. That's a garantee I give you.
As for PTF. It seems like most of the discussion has been plain deleted, which I think is sad. Not all good discussions have both parties in full agreement. I think there are a lot of counter arguments to starting a hedge fund, most specifically for people with no experience in dealing with institutions or managing money with a long enough track record. For every case like you PTF, you can see a dozen which resulted in plain bankruptcy, and loss of trust by family and friends.
However, I think I owe you an apology for my agressive tone, which was not necessary. You obviously provide very useful advice to those who want to start their hedge fund. But I'm not sure this is good advice for the 'qualified' investors that will bankroll them. Managing money is becoming increasingly complicated - compliance wise. Lots of people want to do it, not all can. And this complexity is one way of filtering out those people. One shouldn't even consider doing it without being able to take a least a million in expenses per year (office space, compliance, independent admin, custody, accounting, audit and risk management, client servicing, etc.). And this cost will increase as investors become more diligent in the selection of their managers.
And I still think that anyone who wants to manage money should first convince an experienced manager to hire them, before convincing unexperienced investors to bankroll them. In fact, around here we have a law that forces anyone to have at least 5 years of experience as analyst or assistant portfolio mgr before actually managing money. Not that bad of an idea when you think about it.
And for all the others who dream of being top hedge fund managers before they turn 30 without a single year of industry experience, I wish good luck to them and most specifically to their families and friends.
^we're talking about two different things. You're talking about starting a real hedge fund to manage institutional money. Most are interested in a small fund/CTA/LLC....managing a few friends and families money, probably a small % of their net worth (hopefully). I agree, though....the pikers on this site have no business managing institutional money. Luckily, they won't ever have that problem.
As to my record, you would have to be nuts to think Goldman cares. They came to my school and recruited engineers who don't even trade.
I have a family friend, worth 9 figures, who said he would let me run some of his money for him, although not a lot out of the gate (mostly out of charity)...and he's a retired institutional oil trader. I already manage a small amount of my family's money (less than 5% of net worth). I have no offer at Goldman. So I dunno, which one's easier? Depends. I figure, if I get a longer term track record, get my CFA, I might get to an institutional position. I just didn't get an offer right out of undergrad. In a roundabout way, I agree with you.
I'd be interested in your thoughts, about where I should direct my efforts, for a 23 year old.
As to my record, you would have to be nuts to think Goldman cares. They came to my school and recruited engineers who don't even trade.
I have a family friend, worth 9 figures, who said he would let me run some of his money for him, although not a lot out of the gate (mostly out of charity)...and he's a retired institutional oil trader. I already manage a small amount of my family's money (less than 5% of net worth). I have no offer at Goldman. So I dunno, which one's easier? Depends. I figure, if I get a longer term track record, get my CFA, I might get to an institutional position. I just didn't get an offer right out of undergrad. In a roundabout way, I agree with you.
I'd be interested in your thoughts, about where I should direct my efforts, for a 23 year old.
Great thread. PFT, thanks for a great read. I have traded for about 10 years and had 2 blowups early on (remember the CMRC days?). I just trade options on the SPY and have documented my performance since Aug 14, 2007. Where and who do I approach in looking for work? attached is my performance against the SP500, real $, including effect of fees, commissions, interest, etc.
Just an observation, great traders don't talk like this.
Cosine, although you did attack PTF, you did apologize and it takes a big man to do so. It seems like your passionate about protecting John Q Public from the likes of charlatans and for that you should be commended. It's the elitists you should be attacking, there "I'm soo good" atitude destroys people and industries.
I am starting a small hedge fund and have found PTF's advice to be helpful. The notion that I need to lay out $1mm in infastructure year one is incorrect. I spoke to my new accountant/administrator yesterday, he stated that he has dozens of funds in the $90mm range. He's charging me like $5k a yr.
Maybe I am a piker but if I can average say 20% return on a 0/20 payout = $3.6mm
One of my brokers says he has clients that are looking to invest with new managers, they feel they are overly invested in mammouth funds.
My PA brokerage team just moved to a different firm and the jr. guy that stayed is all but begging for a shot, I will immediately become his biggest client, worth a trial run? why not.
central park
Guest
Man, no wonder regulators are clamping down on our business.
what the hell, give the work to the junior guy in a no name broker--afterall its just OPM. who cares, right??!
oh, and when your at it, combine the accountant and administrator function with the local tax preparer on the corner. why not just print up your own statements? yeah, that makes good sense, you'll make the money up next quarter.
yeah! its only OPM!
what the hell, give the work to the junior guy in a no name broker--afterall its just OPM. who cares, right??!
oh, and when your at it, combine the accountant and administrator function with the local tax preparer on the corner. why not just print up your own statements? yeah, that makes good sense, you'll make the money up next quarter.
yeah! its only OPM!
Quote from central park:
Man, no wonder regulators are clamping down on our business.
what the hell, give the work to the junior guy in a no name broker--afterall its just OPM. who cares, right??!
oh, and when your at it, combine the accountant and administrator function with the local tax preparer on the corner. why not just print up your own statements? yeah, that makes good sense, you'll make the money up next quarter.
yeah! its only OPM!
I said PA brainchild, it's my money. Congrats, I normally don't respond to piss ants.