Chance meeting with a guy who turns out allegedly to be working for a hedge fund. Seriously, who knows. So many blaggers about these days.
But his detailed knowledge of the markets, detailed because he seemed to know what he was talking about and i usually dont, was a tad bit impressive.
He says: 'What kinda return are you getting?'
So i says: 'Somewhere between 5 and 10% per month' (i've been known to stretch the truth a little myself)
So he says: 'Whats your risk capital?'
So i says: 'Around 5-10% of my account'
So he says: 'Look here, your risking 5% of your account for a 5% return. Thats good stats. Your return might be 5% on investment capital, but actually its 100% per month on risk capital. Thats impressive and beating the curve for most hedge funds.'
So rather quickly i'm getting impressed with my self. I didnt tell him i'm hedging and martingaling; and one day my account will be blown. oooh no.
So i says: 'Do you think i should start my own hedge fund then?'
So he says: 'With a record like that investors should be chuckng money at you, but they won't. Bottom line is you're uninvestable'
So i says: 'Huh?'
So he says: 'Whats the guarantee?'
So i says: 'Whats the guarantee of what?'
So he says: 'Whats the guarantee that only 5-10% of your account is at risk?'
So i says: 'Huh?'
So he says: 'No savvy investor will ever be interested in you. You'll have his money and he'll have no guarantee of a return, and worst still, he'll have no guarantee that only 5% of his money is at risk. For all he knows you could be an aspiring Nick Leeson.'
So he says: 'If you want to do it right, you need to get a wrap.'
So i'm thinking chicken wrap? My mind wonders on to food easily.
So he says almost as though he heard my last thoughts: 'Wrap the stop loss. Insure it.'
So i says: 'Aaahaa... How does that work then?'
So he says: 'Let me tell you how real moneys made. You say your risking 5% for a 5% return right. So if you risked 30%, do you think you could pull in a 30% return?'
So i nods my head in affermation.
So he says: 'Get yourself an investor who'll accept 5% return on 5% risk. Get yourself a wrap to cover losses on 30% of client funds. Trade clients funds risking 30% for a 30% return. Pay said client his 5%. The balance is yours. If it goes to the wall, the client covers the first 5% of liability, the insurers cover the balance, and you'll cover the cost of a premium which'll be what... 5 or 6% of the stop value, and you will have had your chance.'
So i does the math. 100k client funds. Client covers first 5k in losses. I wrap another 25k of clients fund for a cost of 1.25k (monthly). I can now trade using 30k as risk capital seeking to net a return of 30k monthly. Pay said client 5k, pocket the balance.
Any one know a good wrap agent, a 100k client and some free office space in Mayfair?
But his detailed knowledge of the markets, detailed because he seemed to know what he was talking about and i usually dont, was a tad bit impressive.
He says: 'What kinda return are you getting?'
So i says: 'Somewhere between 5 and 10% per month' (i've been known to stretch the truth a little myself)
So he says: 'Whats your risk capital?'
So i says: 'Around 5-10% of my account'
So he says: 'Look here, your risking 5% of your account for a 5% return. Thats good stats. Your return might be 5% on investment capital, but actually its 100% per month on risk capital. Thats impressive and beating the curve for most hedge funds.'
So rather quickly i'm getting impressed with my self. I didnt tell him i'm hedging and martingaling; and one day my account will be blown. oooh no.
So i says: 'Do you think i should start my own hedge fund then?'
So he says: 'With a record like that investors should be chuckng money at you, but they won't. Bottom line is you're uninvestable'
So i says: 'Huh?'
So he says: 'Whats the guarantee?'
So i says: 'Whats the guarantee of what?'
So he says: 'Whats the guarantee that only 5-10% of your account is at risk?'
So i says: 'Huh?'
So he says: 'No savvy investor will ever be interested in you. You'll have his money and he'll have no guarantee of a return, and worst still, he'll have no guarantee that only 5% of his money is at risk. For all he knows you could be an aspiring Nick Leeson.'
So he says: 'If you want to do it right, you need to get a wrap.'
So i'm thinking chicken wrap? My mind wonders on to food easily.
So he says almost as though he heard my last thoughts: 'Wrap the stop loss. Insure it.'
So i says: 'Aaahaa... How does that work then?'
So he says: 'Let me tell you how real moneys made. You say your risking 5% for a 5% return right. So if you risked 30%, do you think you could pull in a 30% return?'
So i nods my head in affermation.
So he says: 'Get yourself an investor who'll accept 5% return on 5% risk. Get yourself a wrap to cover losses on 30% of client funds. Trade clients funds risking 30% for a 30% return. Pay said client his 5%. The balance is yours. If it goes to the wall, the client covers the first 5% of liability, the insurers cover the balance, and you'll cover the cost of a premium which'll be what... 5 or 6% of the stop value, and you will have had your chance.'
So i does the math. 100k client funds. Client covers first 5k in losses. I wrap another 25k of clients fund for a cost of 1.25k (monthly). I can now trade using 30k as risk capital seeking to net a return of 30k monthly. Pay said client 5k, pocket the balance.
Any one know a good wrap agent, a 100k client and some free office space in Mayfair?
bull in a china shop