Who wants to start a Hedge Fund?
- Thread starter vanzandt
- Start date
Kinda halfway serious here.
We all have our strengths and weaknesses now don't we.
Hmmm.
Relocation is an issue for most of you I guess.
Hmph.
Not a bad idea, but probably impractical.
It would work though. I'm a good spotter of talent if I do say so myself. Thats what I can bring. I have a short list of ET posters.
Oh well.
.........whatever
I am not averse to the idea, but what you propose would take so much work it doesn't seem worth it.
Yeah, a group of guys I know trade their own money this way. They call it "the coop". They had to make some sophisticated agreements to avoid freeloading (key problem in that kind of environment) and every strategy is approved by every partner.
If you get a bunch of people with different expertise - you can come up with a bunch of lower Sharpe but still statistically significant strategies and as a package across the "fund" it makes sense.
The regulatory hurdles to setting up a hedge fund today are enormous. You need to raise several hundred million dollars to start with. I don't have that money and don't know how to raise it.
An interesting alternative might be to set up an open source hedge fund. That is an algorithmic fund where the source code was in the public domain.
The obvious objection would be: how would one ever make money out of it? Which is why no one has done it presumably.
My counter argument would be as follows:
Experience over the last 20 years has shown that open source always beats propriety systems eventually. So much so that even companies like Google and Microsoft are starting reluctantly to put their source code in the public domain. So an open source hedge fund would probably end up being very successful. Somewhere along the line one could probably figure out a way to make money out of it...
An interesting alternative might be to set up an open source hedge fund. That is an algorithmic fund where the source code was in the public domain.
The obvious objection would be: how would one ever make money out of it? Which is why no one has done it presumably.
My counter argument would be as follows:
Experience over the last 20 years has shown that open source always beats propriety systems eventually. So much so that even companies like Google and Microsoft are starting reluctantly to put their source code in the public domain. So an open source hedge fund would probably end up being very successful. Somewhere along the line one could probably figure out a way to make money out of it...
Opensource works when there is a network effect. Trading is a zero sum game, to win you take money from me, we cannot both win.
L
lovethetrade
Kinda halfway serious here.
We all have our strengths and weaknesses now don't we.
Hmmm.
Relocation is an issue for most of you I guess.
Hmph.
Not a bad idea, but probably impractical.
It would work though. I'm a good spotter of talent if I do say so myself. Thats what I can bring. I have a short list of ET posters.
Oh well.
.........whatever
Tell me your shortlist and I'll confirm if you're a good judge or not.
Haha...
I would never do that. Why would I want to create some kind of animosity here on a public venue allowing folks to squabble over the merits (or lack thereof) of another poster. Not cool. Suffice it to say however that if this were to happen (which it won't in all reality)... The folks brought together would have as much can-do positive attitude and willingness to have fun as they would technical acumen. Perhaps more. It would be a fun shop, of that you can be assured. And it would kick ass and win. There is no doubt in my mind.
But to all the other great points made on the thread... "all great points" lol.
I realize now, who wants to run a hedge fund anyway. I just want to trade my own money.
I guess the spirit of the original post was spawned because I think bringing together a small collective of the right individuals each with unique talents and personalities, of which I know there's more than enough here on ET to pick from, collaborating together could outperform the indexes and the funds.
I guess what I envisioned would be more of a club. And thats nothing new. But the strength would lie in its people. And I think an actual physical location, as opposed to cyber-chat would be key. There's a certain synergy when people actually work together in person that can't be replicated via on-line chat or Skype. It is what is. We are human after-all. This whole concept of "good traders are loners" is complete BS imo. They need not apply. I want smart party folk.
So like I said originally, re-location would be an issue.... so in reality it can probably never happen. But it would work in an ideal world where a handful of folks could all relocate in some cool city and come into the office daily. It would be a fun time, thats for sure. There'd always be a bottle of whiskey and a keyboard to smash. And NO healthy organic snacks. Smoking encouraged.
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Not a team sport. If open source outperformed, Ren-Tec would have been on board. I can't even hire an assistant without fear of leaking intellectual property.
Richard Dennis put the turtle rules into the public domain, because he didn't think anyone would be able to consistently follow them. And he was right. He couldn't follow them himself which is why he blew up. Warren Buffet early in his career was terrified that people would steal his ideas but over time realized that even with his amazing success no one really listened to him so he ended up being very open about his methods.
It would be a long time before people took any notice of a fund started by a few unknowns. People would only be interested after one had successfully traded for a few years, after which one would have made a lot of money.
One could start with the turtle rules actually, backtest them and see if they still worked, then try to tweak them...
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Turtle strategy was long-term trend following, and Buffet invests long-term on value/fundamental basis. When you start getting into low/mid latency price anomalies, stat arb, and correlations, scalability is a HUGE problem.