Trading Wisdom for Aspiring Hedge Fund Managers

[bone]

Securities Laws Compliance

With limited exception, placement agents must be registered as broker-dealers with the Securities and Exchange Commission (SEC). It is also important for placement agents to be registered or licensed, as applicable, with all relevant state and local authorities (although many of such requirements are preempted by registration at the federal level). Finally, the professionals
within a placement agent must have appropriate licenses, as required or issued by the SEC, FINRA, states, or local authorities. As such, fund managers should seek appropriate representations in the Placement Agreement to ensure that the placement agent and its professionals are registered and licensed.

http://www.morganlewis.com/documents/VCPEFdeskbook/VCPEFdeskbook_WorkingWithPlacementAgents.pdf

 

[jack hershey]

Quote from darkhorse:

Trading Wisdom 04: The Great Trades Are Obvious

"The great trades don't require predictions. The Soros trade of going short the pound in 1992 was based on something that had already happened - an ongoing deep recession that made it inevitable that the U.K. would not maintain the high interest rates required by remaining in the E.R.M. Afterward, everyone said, "That was incredibly obvious."

"Most of the great trades are incredibly obvious. It was the same in late 2007. In my mind, it was clear that the financial system was imploding and that most market participants hadn't noticed."

- Colm O' Shea, Hedge Fund Market Wizards

JS Comment:




Do you agree that the great trades are obvious? Why do so many market participants miss what is unfolding right before their eyes?

What are the elements in your process for observing, keeping tabs on, and exploiting major macro trends?

Get Hedge Fund Market Wizards on Amazon

Get Trading Wisdom via e-mail

All trades are obvious.

For the retail guy or for the fund manager.

There is an inverse relaionship between the duration and the amount of capital involved in the trading.

Alll successful traders grow capital and have to deal with the capaity of markets,

The is an intersection of the capacity line and the capital growth line. Strategies have to anticipate how to keep the money velocity at optimum.

Profits come in segments and the segments always deal with the obvious market's sentiment.

Saying something happened in 1992 is a statement of not being able to trade OPM or even personal monies.

Most people have a lifestyle cash flow.

William J. O'Neil demonstrates this transition from a scratch start to a very effective participation level in the financial industry. He emerged in 27 months from his 500 start.

I am a Darvas contemporary,so I did not need to start with 500 dollars as WJO'N did. Nor did I have to spend the time WJO'N or Darvas did.

Darvas never traded for others. WJO'N did the equivalent of selling Levi's in the gold rush.

Fund managers do not make money through trading of any sort. WJO'N and Darvas did. Fund managers sell soap to get OPM and then they charge fees and commissions and never make any money trading.

Hence the 2 and 20 deal.

To become a trader the emphasis is on learning how the market works and NOT on learning how to make money.


All trades are obvious as one looks at the market operating in the manner in which the market works.

Two opposite trends for a cycle. Trends have three parts: dominant, non dominant and dominant. It cannot be any other way. Trends must overlap because a trend ends within its boundary. The trade is obvious at the moment of he beginning of the overlap.

O'Neil and Darvas figured this out in two diffrent eras. neither required much time to figure out how the market operates and then trade accordingly.

Put up the significant quotes of O'Niel and Darvas from their writings.

Aspiring fee and commision collectors need to know how skilled and knowledgable traders started from scratch ny learning what was going on. They may have to hire churners someday.

There were 100 events in new knowldge from the tulip wars until 1957. Do the list.

 

[sle]

Quote from jack hershey:never make any money trading.

Are you saying that you actually make money trading? I still can't figure out if you are a cheat or a bloody clown...

 

[Wide Tailz]

Here are a few from Victor Sperandeo:


"When you are trading at your biggest, you should be making money instantaneously."

"Over a five year period, I trained thirty-eight people.... ....Of these, five made money."

"One of the people I picked was a high school dropout.... he was one of the five who made a great deal of money.
....He was very aggressive and alert. Also, he had been in Vietnam and had a hand grenade explode near him.... as a result of this experience, he was always afraid of everything. When it came to trading, he was more worried about about losing than winning. He took losses very quickly."

"On the other extreme of the intelligence spectrum, one of the people I trained was a genius. He had a 188 IQ.... that same person never made a dime in trading during five years.
....I discovered that you can't train how to trade by just imparting knowledge. The key to trading success is emotional discipline. "

"To be a successful trader, you have to be able to admit mistakes. People who are very bright don't make very many mistakes. In a sense, they generally are correct. In trading, however, the person who can easily admit to being wrong is the one who walks away a winner."

Words of wisdom from the master. Ego does not equal money.

"everybody gets what they want"....


:eek:

 

[Wide Tailz]

Quote from darkhorse:



JS Comment:

Do you agree that the great trades are obvious? Why do so many market participants miss what is unfolding right before their eyes?

I totally agree with this. My best trades have happened when I assumed my analysis was wrong, when I didn't want to trade, yet the price action made it totally obvious what was about to happen.

"I never buy the bottom and I always get out before the top"

-'Old Man Rosthchild', from Reminiscences of a Stock Operator

 

[pythontrader]

Quote from sle:

a bloody clown...

That is pretty much what she is...

 

[darkhorse]

Quote from jack hershey:


Fund managers do not make money through trading of any sort. WJO'N and Darvas did. Fund managers sell soap to get OPM and then they charge fees and commissions and never make any money trading.

Hence the 2 and 20 deal.

What are you talking about? This is an utter nonsense statement.

The great managers all have multi-decade track records and don't make a penny off commissions. It's completely logical to leverage one's skill via OPM for those with the talent and temperament to do so.

You write like an Alan Greenspan speech. I can't tell if it's deliberate or unintentional.

 

[dtrader98]

Quote from darkhorse:

Trading Wisdom 04: The Great Trades Are Obvious

"The great trades don't require predictions. The Soros trade of going short the pound in 1992 was based on something that had already happened - an ongoing deep recession that made it inevitable that the U.K. would not maintain the high interest rates required by remaining in the E.R.M. Afterward, everyone said, "That was incredibly obvious."

"Most of the great trades are incredibly obvious. It was the same in late 2007. In my mind, it was clear that the financial system was imploding and that most market participants hadn't noticed."

- Colm O' Shea, Hedge Fund Market Wizards

JS Comment:

Do you agree that the great trades are obvious? Why do so many market participants miss what is unfolding right before their eyes?

What are the elements in your process for observing, keeping tabs on, and exploiting major macro trends?

Get Hedge Fund Market Wizards on Amazon

Get Trading Wisdom via e-mail

My personal experience has been that nothing is obvious except for hindsight and maybe inside information. But that's just me.

 

[darkhorse]

Quote from dtrader98:

From what I gathered, Soros was pre-informed on policy changes from Baker and friends and made a fortune off information others did not have equal access to.

My personal experience has been that nothing is obvious except for hindsight and maybe inside information. But that's just me.

That's not how the various recounts tell it, from Druckenmiller (who was the actual architect of the trade) and others within the firm.

It's possible, of course, But I am skeptical of the inside information angle because, in this case, the macro data really was in fact obvious: It didn't take inside information to realize Britain was in a truly untenable situation.

Also being important to distinguish "It is obvious X is going to happen" from the likely timing of when X will happen. Two very different things, w/ possible inside info edges applying more to the second than the first.

In personal experience, one of my most frustrating experiences of an "obvious" miss was the Blackstone IPO in mid-2007.

The private equity boom had gone absolutely off the rails, Schwarzman was on the cover of Fortune as "the new king of private equity" or something to that effect, and the Blackstone IPO itself was a "sell at the top" from guys who had mastered the art of unloading on greater fools.

I opined loudly and in writing that BX going public probably marked the exact top of the PE boom. And it did. I didn't act, though, because I thought my insight was "too obvious" -- that I must have been missing something.

I wasn't missing anything.. I should have had more confidence in my own read and shorted the hell out of it.

Point being more confirmation that, sometimes when a trade screams OBVIOUS at you, it really is...

 

[jack hershey]

Quote from darkhorse:

What are you talking about? This is an utter nonsense statement.

The great managers all have multi-decade track records selling soap and don't make a penny off commissions.do contracts that have he numbers 2 and 20 in them It's completely logical to leverage one's skill via OPM for those with the talent and temperament to do so.The effort is intermediate term in nature and usually hedged, i.e., other than trading

You write like an Alan Greenspan speech. I can't tell if it's deliberate or unintentional.