The problem with P&D is that it doesn't scale well. It's also highly lucrative to the point where you wouldn't necessarily want to share that edge with managed funds. Mainly, it doesn't scale and generally pumper has enough $$ to take full advantage of pump. I don't know details of Tim Sykes' personal finances, but my impression is that he caught the internet wave, publicized himself real well, built up a small HF but wasn't a particularly good trader. I'd actually be curious how much he makes trading these days vs. educating. He's a great marketer that's for sure.
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What keeps a brokerage employee from shadowing your trades?
- Thread starter Aston01
- Start date
The problem with P&D is that it doesn't scale well. It's also highly lucrative to the point where you wouldn't necessarily want to share that edge with managed funds. Mainly, it doesn't scale and generally pumper has enough $$ to take full advantage of pump. I don't know details of Tim Sykes' personal finances, but my impression is that he caught the internet wave, publicized himself real well, built up a small HF but wasn't a particularly good trader. I'd actually be curious how much he makes trading these days vs. educating. He's a great marketer that's for sure.
The problem with P&D is that it doesn't scale well. It's also highly lucrative to the point where you wouldn't necessarily want to share that edge with managed funds. Mainly, it doesn't scale and generally pumper has enough $$ to take full advantage of pump. I don't know details of Tim Sykes' personal finances, but my impression is that he caught the internet wave, publicized himself real well, built up a small HF but wasn't a particularly good trader. I'd actually be curious how much he makes trading these days vs. educating. He's a great marketer that's for sure.
Here is a excerpt from Schwager's book:
https://books.google.com/books?id=u...n ctas with drawdowns jack schwager&f=false
I do agree with you on the liquidity of pump and dump. But regarding Sykes, wasn't he trying to front run his followers but pumping a stock and then dumping it? It's my understanding he blew out from doing this. So even when one has the ability to manipulate his own this stocks, you can't make money. Now to be fair, you did allude to what I said earlier, that Sykes is probably not a good trader and that brings it back to my main point. One HAS to be a good trader. There is no way around this.
Spearhead it's a lot harder then it looks. There is a lot of math behind this. Look, let's change our angle. Take a prop firm. So prop firms basically have the ability to do "legally" what is being prescribed on this thread. Say firm XYZ has 100 traders. Their optimal strategy is to use their own in house performance metrics, find the best traders and increase their capital allocation to them and reduce their capital allocation to the bad traders or fire them. So that is what firms do. But time and time again, this lead to prop firms blowing up. What ultimately happened was firms over weighted their exposure to a small number of traders whose size ultimately took the firm down. This happened to a lot of big trading firms in the Chicago area. On paper it looks so easy and sounds so simple. It's just extremely difficult to execute in practice. This area of finance has been studied thoroughly. The most optimal model appears to still be the diversification model. Spread your bets. Don't bet it all on one horse.
You have a very purist viewpoint. I think you're saying that trading is fundamentally difficult, which I'd agree with. It's a little off-topic though since the thread was about whether it's theoretically possible for a brokerage employee to mirror customer trades. Theoretically, would you agree that if you've identified a customer that returned 3000% over the past 5 years trading options before every GOOG earnings and selling right after, that you wouldn't get an advantage trying to mirror their trades?
Here is a excerpt from Schwager's book:
https://books.google.com/books?id=utQv7bSnjUQC&pg=PA179&lpg=PA179&dq=investing+in+ctas+with++drawdowns++jack+schwager&source=bl&ots=VGrfX6aBsa&sig=SYSl5f-0bKOSZ7L2O3-5e58JR0g&hl=en&sa=X&ei=h1yZVdzNJ4-tyATZp4rYCA&ved=0CCAQ6AEwAA#v=onepage&q=investing in ctas with drawdowns jack schwager&f=false
I do agree with you on the liquidity of pump and dump. But regarding Sykes, wasn't he trying to front run his followers but pumping a stock and then dumping it? It's my understanding he blew out from doing this. So even when one has the ability to manipulate his own this stocks, you can't make money. Now to be fair, you did allude to what I said earlier, that Sykes is probably not a good trader and that brings it back to my main point. One HAS to be a good trader. There is no way around this.
My impression of Sykes is that he may have done some P&D during the internet heydays (I wasn't trading back then), but pretty much got lucky with internet stocks. I think it was more like 2006-2007ish? that I remember seeing his site, timalerts, chatroom, etc. and became a marketing machine. I think he blew out his hedge fund way before this. I'm sure he is minting money now selling education. I'm guessing he makes a lot more selling education than he does trading.
You have a very purist viewpoint. I think you're saying that trading is fundamentally difficult, which I'd agree with. It's a little off-topic though since the thread was about whether it's theoretically possible for a brokerage employee to mirror customer trades. Theoretically, would you agree that if you've identified a customer that returned 3000% over the past 5 years trading options before every GOOG earnings and selling right after, that you wouldn't get an advantage trying to mirror their trades?
I don't believe there is a statistical advantage there no. I believe there is a great deal of randomness in the world and time is a variable. Streaks can last for very long periods of time. I know, I've been trading since the mid 90's. I also ran a prop firm office in Chicago and managed the risk of over 40 traders. Many of them from this very website. I saw all their trades. There is absolutely nothing to gleam from the data outside of variance. Some guys got hot, some guys got cold. One of the best traders from ET traded in my office. I have a great deal of respect for his trading. But I can assure no one on ET could replicate what he does. I have spent my entire life in this business and I've have spent thousands of hours analyzing every strategy known to man. The fact of the matter is, real alpha is generated by the variables I listed previously. You cannot copy success. Wall Street figured this out years ago. It's why Goldman doesn't have 3 employees working there, they have 30k. They get it. I always try to keep an open mind about this stuff, but up to this point, I have seen no evidence to suggest otherwise. The "real" edges in trading have come from bid/ask spreads, structured products, cheap execution costs, cheap leverage and technology. Everything else is just a dream that gets sold to the sheep. And we all know what happens to the sheep.
But when you use hindsight it is valid as argument? That was my point. LOLOf course it's hindsight. That is the point. He was making the statistical argument that you could blindly pick the worst performing CTA's and perform better then carefully chosen CTA's with good performance at the time. That WAS the point. LOL.
But when you use hindsight it is valid as argument? That was my point. LOL
I didn't use hindsight. I'm not "predicting" anything.
I don't believe there is a statistical advantage there no. I believe there is a great deal of randomness in the world and time is a variable. Streaks can last for very long periods of time. I know, I've been trading since the mid 90's. I also ran a prop firm office in Chicago and managed the risk of over 40 traders. Many of them from this very website. I saw all their trades. There is absolutely nothing to gleam from the data outside of variance. Some guys got hot, some guys got cold. One of the best traders from ET traded in my office. I have a great deal of respect for his trading. But I can assure no one on ET could replicate what he does. I have spent my entire life in this business and I've have spent thousands of hours analyzing every strategy known to man. The fact of the matter is, real alpha is generated by the variables I listed previously. You cannot copy success. Wall Street figured this out years ago. It's why Goldman doesn't have 3 employees working there, they have 30k. They get it. I always try to keep an open mind about this stuff, but up to this point, I have seen no evidence to suggest otherwise. The "real" edges in trading have come from bid/ask spreads, structured products, cheap execution costs, cheap leverage and technology. Everything else is just a dream that gets sold to the sheep. And we all know what happens to the sheep.
For the sake of arguing the advantage that a brokerage employee might have, I purposely focused on cases like Icahn, Ackman, P&D, illegal inside trading..
E.g.
- Icahn buys a position in AAPL and publicly starts pushing for dividends, etc.
- Ackman buys Allergan while working with Valeant on an acquisition offer.
- Muddy Waters shorting <insert numerous China stocks here>, then publicly releasing damning research
- Raj Rajaratnam getting various tips from insider sources
I can accept the fact that people might not consider this to be "trading" since they are either controversial or outright illegal, but if you don't think these techniques are generating alpha, then I really can't argue.
Yes you did a prediction: you predicted that you cannot predict.I didn't use hindsight. I'm not "predicting" anything.
That's a prediction.
I did made a prediction and I will contact you end of this year so that we can check things.
You have no idea at all how his trades are. That is the first and essential thing you should know to make a correct judgement.
If somebody gives you a closed box, can you tell what this box is worth without knowing what is inside?
Why everybody who enters a big fund as an employee has to sign very restricting documents? Because they want to share all their knowledge with the whole world, or to protect their knowledge?
I am just a small trader but I know dozen of people on ET who are interested in my trades and even more in my tradeplans. Especially if they receive them for free.
I am interested in your trades, can you put them on ET in full details? And if not, can you tell me why not?
If you desperate want to buy some thing, the first thing you do is tell the seller that in fact you are not interested and the price is much too high. But as a good person you want to help him by giving him small money so that he gets ride of something that in fact has no value and is useless. The same applies to your remark.