The Sleaziest Show On Earth

[marketsurfer]

This is from 2004--- very interesting article

http://www.forbes.com/global/2004/0524/030_print.html

edge funds will suck in $100 billion this year from an ever-broader swath of investors. Pretty good for a business rife with exorbitant fees, phony numbers and outright thievery.

Koji Goto's pitch for Epic Investment Partners seemed to offer everything a hedge fund investor could want. Epic had a record of earning 80% annually. Goto, though only in his early 30s, was a seasoned veteran who had managed $250 million in client assets. Now he was committing up to $7 million of his own money to Epic. He also claimed to hold exclusive rights to sell frankfurters in Home Depot stores.

All told, Goto told investors to count on earning 500% in a few years. The spiel has been good enough to suck in $6 million from 17 people since 2002. But rather than invest the money in the Epic hedge fund, Goto allegedly funneled $1.4 million to his wife's personal brokerage account and paid lesser sums to Las Vegas' Bellagio Casino, Maserati of New England and Chen Yang Li Restaurant Holdings, in which Goto is an investor. Even the hot dog claim was a whopper. The Securities & Exchange Commission slapped Goto with a securities fraud suit in November, and a New Hampshire grand jury handed up a 68-count indictment in February alleging theft, criminal solicitation and securities fraud. Goto denies the charges.

It's amateur hour in the hedge fund business. This sideshow of sometimes bizarre (and always costly) investing is on a tear like never before. It's attracting some of the shrewdest and sharpest minds on Wall Street--and also shills, shysters, charlatans and neophytes too crooked or too stupid to make any money for you. In 1990 only 600 or so U.S. hedge funds were in business. When we last surveyed the genre (FORBES, Aug. 6, 2001) there was $500 billion on the table globally. Now $800 billion is invested, says Hedge Fund Research, a hedge fund tracker, divided among 6,300 funds--900 of them less than a year old. Besides growth, there is a lot of coming and going in this business. More than 10% of hedge funds tracked in the past year by HedgeFund.net are now defunc.......

 

[oldtime]

what is the minimum to be a qualified investor today?

in 1990 it was 250 or 350k

now school teachers could probably retire with that much money

my mother only invests in the Vanguard S&P 500 index fund

according to reports, she has outperformed 85% of all professional money managers on Wall Street, cnbc, and Bloomberg TV combined over the last ten years.

and so far, she's beating the heck out of me in 2013

 

[dandxg]

Quote from oldtime:

what is the minimum to be a qualified investor today?

in 1990 it was 250 or 350k

now school teachers could probably retire with that much money

my mother only invests in the Vanguard S&P 500 index fund

according to reports, she has outperformed 85% of all professional money managers on Wall Street, cnbc, and Bloomberg TV combined over the last ten years.

and so far, she's beating the heck out of me in 2013

What is the name of her hedge fund? We could call it Old Timer's fund what you think

 

[newwurldmn]

Quote from oldtime:


my mother only invests in the Vanguard S&P 500 index fund

according to reports, she has outperformed 85% of all professional money managers on Wall Street, cnbc, and Bloomberg TV combined over the last ten years.

and so far, she's beating the heck out of me in 2013

And she won't pay any taxes until she sells... whereas all of us traders take like a 30% haircut (or more)

 

[oldtime]

Quote from dandxg:

What is the name of her hedge fund? We could call it Old Timer's fund what you think

well, at 2 and 20 she would probably underperform

the problem is, most of these hedge fund customers don't have a clue about investing

I never worked with big clients, but I would try to explain what I was doing and the typical doctor said, "I don't care what you do with the money, I'm a doctor, and I work hard, and I want to spend my hard earned free time golfing. I'm paying you to manage it, not to educate me."

The one person I knew who really excelled in this business and did right by her clients was an RIA who charged 1% of the gross per year. Many of her clients started out small. She was very personable, a real people person. Not really that knowledgable about the markets. But after 20 years, all her clients were millionaires. And a lot of that was just 200 or 300 dollars a month over and above their expenses.

 

[oldtime]

Quote from newwurldmn:

And she won't pay any taxes until she sells... whereas all of us traders take like a 30% haircut (or more)

well, she has to pay taxes on the dividends, but you are correct, the cap gains are minimal

when the S&P hit 1306 I switched her from reinvesting dividends to paying them in cash to her money market

and that is what we will use to pay the taxes for 2012