To those making 20% or more a year trading...
- Thread starter Remiraz
- Start date
Exactly, but for newbies return is return.
I know traders who beat the yearly return of Buffett each mont. But as i said, traders not investors.
I have at least 1 day a week that i make 20%. But i daytrade the ES.
I will never be able to achieve what Buffett did, but probably he will never be able to achieve what i do either. We both do two completely different things. The only common thing is that we buy and sell to make money.
Making 25% a year didn't make buffet rich. It was the leverage he gained using all the money other's invested in him and his fund. As others have said, you can't really compare.
A lot professional traders shoot for around 1% a day, which compounds to over 900% a year. I'm sure few achieve that, but some do.
For the 11 full years ended December 1999, Jim Simons' Medallion hedge fund cumulative returns are an eye-popping 2,478.6 percent.
This multi-billion fund returned 29.5% in 2005. Setting aside a management fee of 5% and a performance fee of 44%, the fund gained almost 60%.
Its after-fee return last year was below the 34% annualized return Medallion has generated since its 1988 inception.
This multi-billion fund returned 29.5% in 2005. Setting aside a management fee of 5% and a performance fee of 44%, the fund gained almost 60%.
Its after-fee return last year was below the 34% annualized return Medallion has generated since its 1988 inception.
You need two things to become the richest man in the world:
return and capital
Even if you make 1% a year you can become the richest man in the world; all you need is a starting capital of 1,000,000,000,000,000,000,000,000 $. On the other hand if you make 100% a year on 1 cent you will still stay a poor guy because it will take 20 years to make 5K.
BTW: what's the use of being the richest? If you make 10 million a year you normally don't bother about the others. These people will never calculate to see how fast you can get how rich. Hypothetical calculations are the favorite activity for newbies and/or people who will never succeed in becoming successful in trading.
It's all about scalability. And it's why most hedge funds are having a hard time making money today compared to 15 years ago. It's very difficult for them to move large amounts of money around without having the market get away from them. And you can see funds finding alternative ways to invest - insurance, reinsurance, fuding movies, you name it and they are probably trying it. For a daytrader, this is not much of an issue - very little slippage on 1000 shares of a stock.
Buffett never had to address the issue of scalability since he doesn't buy-in on the open market and/or buys companies whole.
In addition, there is something to be said for buying a company and controlling its destiny (or being on its board) as opposed to buying a stock based on a well-informed plan... it's ultimate destination is beyond your control.
So, to compare Buffett's record with that of a daytrader - even a swing trader - is to miss the point altogether.
Buffett never had to address the issue of scalability since he doesn't buy-in on the open market and/or buys companies whole.
In addition, there is something to be said for buying a company and controlling its destiny (or being on its board) as opposed to buying a stock based on a well-informed plan... it's ultimate destination is beyond your control.
So, to compare Buffett's record with that of a daytrader - even a swing trader - is to miss the point altogether.
You don't really believe this, do you?