Ehhhh I dunno, over long time frames the universal wisdom is that time in market >>> timing the market, right? This can work out (and I’m glad it has for you) but it seems risky.
If you really think you can beat the market you should start a separate thread documenting every trade you make. If you actually do it over a 3+ year period you’ll be able to raise tens of millions of dollars or more and become very very rich very quickly.
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I’m on record as a diehard Boglehead and a skeptic of your methods but I would be interested in following your trading thread.
It might be a lot of work to document past trades so maybe just start on 8/31 with your open positions? That will make it easy to start tracking monthly performance.
I think I could just filter my trading history for buy/sell transactions and take a screenshot and crop it down, right? Only thing is figuring out whether I want to disclose the size of my IRA or keep all the units relative - it kind of matters in spots where I add or trim positions because the units may not round off.
Currently in deep dive mode hunting for new positions, so I’ll circle back to this in a couple days.
It’s a lot harder to be credible coming from a nonstandard background than you would think.
Also managing other people’s money is very very different than managing your own.
I will throw 1k at commonWealth mutual fund
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I’m up about 50% on the last year when I cramered BTC. Subscribe to my onlysubs for more picks
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Beating the market inside an IRA is much easier than beating the market with taxes.
Of course, if his edge is that big, he’s beating it taxes or not.
Anyone that can demonstrate a methodology that rates to beat the market on a risk-adjusted basis would be in a great position to get their foot in the door at a hedge fund.
If you believe you have an approach that beats the pants off the market on a risk-adjusted basis, then you would be crazy to not pursue strategies to allow you to scale that approach as quickly as possible (i.e. doing more than managing a six-figure IRA or whatever).
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Right and I strongly disagree with professional finance about how to measure all of that. Starting with the risk adjusted return I simply don’t agree that the sharpe ratio measures what they say it does (I don’t think volatility = risk just for starters). I also don’t trade all that much which means even I don’t think I have a sufficient sample size to make any significant claims.
The thing about value investing is that the reason it works is that it doesn’t always work. It underperforms frequently for multi year periods. Hedge funds typically aren’t super interested in value guys because those strategies are a great way to go out of business when you’re trying to justify a 2 and 20 (even if those numbers are lower) style fee structure.
Just getting someone to take the time to actually review your results at a hedge fund is almost impossibly hard.
The real problem, of course, is that the vast majority of hedge funds are scams nobody should invest in. They aren’t worth 10% of the fees they charge investors and the most important skill the person leading the fund usually has is fundraising from contacts they acquired from being born rich or working in banking for a few years. They would be much more interested in my business connections and the money they might invest than in any alpha I might generate.
Meanwhile over in logistics I have a realistic chance of making a million a year before I turn 40. Paying my dues again is super unattractive, but I do have money that needs to be allocated arriving in my accounts pretty constantly.
But yeah one of the reasons outsiders can’t really just come in and work at hedge funds is that you would basically have to do several years of full time work for free carefully documenting your methodology as you went along for a chance at a hedge fund. No thanks I’ll just do my investing stuff the way most people do a crossword puzzle. It’s a fun hobby that I seem to be good at, but I’m definitely not going to bet my career on it lol.
I get to invest in a guilt/stress freeish kind of way where I’m not particularly worried about the results. If I don’t make as much money as I would have made in an index fund all I’m out is that money which probably won’t change my life in any meaningful way. If my results for a quarter are bad I’m not at all worried I’m going to lose my job. That’s an entirely different experience than managing other people’s money.
I care so much about the lack of stress that I don’t really do anything that has much of a gambling aspect to it at all. When CW talks about merger arb plays he’s doing he’s certainly not getting me to ride along lol. I’m in a bunch of companies that I think I paid less for than they are worth. With any luck they’ll get a nice spike of good news pop XX% and I’ll instantly sell them and replace them with the next thing that meets my metrics. Even if what I’m doing ends up being wrong it won’t be that wrong, certainly not anywhere near as wrong as putting money in an underperforming actively managed mutual fund with a front end load lol.
One thing I’m pretty sure of is that if I melt down because my bets went sideways all of you index people are going down right along with me. My portfolio is packed full of totally unsexy value stocks that simply don’t have that much room to fall before someone buys the whole thing at a probably higher price than I bought in for… and Berkshire Hathaway which would literally probably still be technically solvent in the Mad Max universe.
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Modern finance theory also does not think that volatility = risk. Otherwise you wouldn’t be able to explain why small cap value stocks drastically outperform other asset classes relative to their volatility.
And something like the Sharpe ratio (while it has utility) can be easily manipulated by using strategies that are asymmetric (e.g. selling covered calls). Look at the eye popping Sharpe ratio of something like JEPI for example.
Right that’s why I don’t agree with large chunks of professional finance about it. I’m sure there’s some smart buy side money out there that agrees with me, but good luck finding them and getting your information in front of them without already being an insider and knowing at least some of the players in the game on a personal level.
Look you might actually be right about where I am at 38 vs where I was at 27-28 and was really trying to figure out if getting into a hedge fund was viable. I’m a lot smarter and a lot more well spoken now than I was then. I also have a track record of being great a capitalism that is so glaringly obvious at this point that I have no intentions of going back and finishing the bachelors in econ I need a class and a half to complete. I probably could get in front of a hedge fund and I probably could get a job.
Probably for less money than I make now. I might be making some Sklansky bucks because it raised my odds of becoming a billionaire from totally impossible to very improbable, but I am not Jeff Bezos lol. I have a really good job that I’m really good at and the security that entails is worth a lot to someone who grew up poor.
I will literally never find work/life/$$$ balance as good as I have it right now. Absolutely impossible. I ran hotter than the sun already I have zero desire to do another run out lol.
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Dude you’re an incredible gambler. It’s not just judgement it’s also temperament. You simply keep thinking clearly even when uncertainty is maxed and everyone is freaking out. I’ve had the opportunity to watch you in high stakes situations a few times now and you just thrive there.
So yeah all of that stuff is great for you. I on the other hand am pretty profoundly mentally ill and I do not have the necessary emotional resources to deal with the massive swongs that go with being a truly great gambler.
So I grind out above average and hate every minute of it and then lose a sizable chunk of the upside getting out of the bet at the first remotely justifiable opportunity.
The great thing about logistics is that if I do my job well enough to start with I get this really satisfying frictionless transaction where everyone goes away happy. Really gratifying for my people pleasing tendencies. It’s obviously not always like that and sometimes the risks can get pretty insane, but I’m not successful in logistics because I thrive in those situations, I’m successful in logistics because I avoid them almost entirely.
When things are really really high stakes (really high conflict) I play a very solid ABC tag game until I find an exit ramp which I always take. The difficulty of emotionally regulating is so high that whatever advantages I have in normal situations are more than counteracted by the distraction of me having a panic attack the entire time lol.
You on the other hand in the exact same spot are having the time of your life and are about to feast on the carcasses of the people like me who just want to get home alive lol.
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I was thinking about this some more. Let’s say you’re certain that you have a market beating strategy (I realize nothing is certain, but we’re hypothetical here), which is the better play.
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Do what is suggested above. Prove you’re a winner and get people to invest. Charge them for the privilege. You can also invest in your own fund.
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Don’t tell a soul and just print money on your own.
I guess the true answer is that it depends (on a lot of things), but I think I’d be leaning towards #2.
In a world where you can find the investors and charge them 2 & 20 (or whatever), the best move is #1 until you have enough money yourself to max out your strategy, then kick them all out and do #2 yourself.
The problem is that, for many strategies, once the strategy is known, everyone does it and it will no longer work. And if you have a legit fund with investors, you’re not really gonna be able to keep it that much of a secret.
This isn’t close. Someone that had a strategy that reliably generated a few percent of alpha and the right connections would/should become a hundred millionaire within a decade or two. Compounding that extra alpha on a six figure IRA? Not so much.
Thank you very much… Very kind. I would say I thrive on those situations usually, and I definitely have the time of my life in those situations in tournament poker, but in other situations (like the US Steel play recently) I tolerate the significant discomfort and try to make level headed decisions. Perhaps if I keep beating the market for 10 years, I’ll enjoy those situations more lol…
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Whoa, I never said that if you kept it to yourself you would use it like that. You’d leverage yourself and pour everything into your strategy. But even then, I’d agree for a lot of strategies option 1 is the way to go.