patrick.net

Rin says

How do you think I'm surviving this current job? I have a medicine ball and a set of dumbbells under my desk. When I finish this post, I'll do a few curls and wood-chopper set.

Trust me, talking to stupid ppl all day can do a job on one's intellect.

Ok, just finished my mini-workout.

Now I can get back to BS-ing with clients and re-explain the difference between Oracle databases and MS Excel and why business object layers are not the trade transaction recorded real-time. And how a proper audit trail, starts with the executed trade first, and then, the tax assignment/jurisdiction after the event is executed. And so on and so on ...

sbh says

Sounds like hell. I hope for you the pay is worth it when you make for the exit.

In the past, my client stuff was 35% of the time and that, I can deal with.

Today, it's ramped up to 100%, because the firm is looking to expand and eventually, do a merge and spinoff with another peer firm. Thus, ALL client issues are given full priority with no exceptions. All behavior patterns are observed and monitored. Even this posting is going through a VPN service.

The end result (or goal) is that the book value grows and then, the small stakeholders (which includes me) can be divested (our severance pkg) and then, the principals get to merge with a bigger house, quadrupling their platinum parachutes. I think the idea is that no HF stays small forever but at the same time, without a legitimate transition into a bigger operation, it'll appear that everyone's bailing which then lowers the book value.

Rin says

Rin says

How do you think I'm surviving this current job? I have a medicine ball and a set of dumbbells under my desk. When I finish this post, I'll do a few curls and wood-chopper set.

Trust me, talking to stupid ppl all day can do a job on one's intellect.

Ok, just finished my mini-workout.

Now I can get back to BS-ing with clients and re-explain the difference between Oracle databases and MS Excel and why business object layers are not the trade transaction recorded real-time. And how a proper audit trail, starts with the executed trade first, and then, the tax assignment/jurisdiction after the event is executed. And so on and so on ...

The way you describe it you could be replaced with a website FAQ.

Rin says

I think the idea is that no HF stays small forever but at the same time, without a legitimate transition into a bigger operation, it'll appear that everyone's bailing which then lowers the book value.

Most hedge funds are not true hedge funds anymore in the traditional sense and are prone to blow up whenever the next crisis hits, esp. when they become big, because they become harder to manage and they start sticking with certain strategies. A true hedge fund should stay small and split if necessary and be able to always open long and short positions and trade any asset class (from futures, soybeans, currencies, to gold) at any given day with plenty of international exposure. They make less in times like the past 5 years where index funds and dumb hedge funds ramp up on a long only market, but when it turns volatile they shine and the risk is always hedged.

New Renter says

The way you describe it you could be replaced with a website FAQ.

That's sort of the goal. The idea is that the sales force corrals the money but part of doing that is to up sell the exactness of our controls/internals.

But then, you don't want that to be openly disclosed on a FAQ sheet either, because you want to make the clients, and their tax and asset management service partners feel special so that they only want to form a relationship with you, over some other firm, who despite providing a lot of paper upfront, do all their own stuff w/o consulting with the clients.

This is all a game.

mell says

Most hedge funds are not true hedge funds anymore in the traditional sense and are prone to blow up whenever the next crisis hits, esp. when they become big, because they become harder to manage and they start sticking with certain strategies.

I concur and that's part of why we're so focused on keeping clients happy, so that we get through the years 4 to 5 issues and come out all right in the end.

Rin says

New Renter says

The way you describe it you could be replaced with a website FAQ.

That's sort of the goal.

I guess my question would be, for what Warren Buffett calls "the two and twenty crowd," why would an investor want to pay such high fees? I've heard the answer that "if you pay peanuts, you get monkeys," but I question that too. Suppose Harry Houdini starts a hedge fund that consists of him taking his investors' money and dividing it into two funds, deducting his 2% management fee from both, then bringing the remainder to a casino roulette wheel. He bets one fund on black, and to hedge the risk of loss he bets his "contra-fund" on red. His fee is 2% of principal plus 20% of gains, so after one round he gets:

2% of both funds+
20% of the "winning" fund,
= 12% of the entire principal invested.

There is a small risk of total loss, but that risk is mainly on the investors who put up the principal. I can see how this is a great model for the fund manager to get rich, but how do the investors believe in it? Is it like in medicine, where they are conditioned to believe that the most expensive must be the best, and they don't question it further? Isn't overpaying relative to value really the opposite of investing?

So from reading your threads, I gather that your current day job is a means to an end. In your case, to carry out your passion in STEM work. Which, as you've convincingly argued, is impossible if one must do so under the thumb of those that control their funding. Makes sense

Where I'm unclear, is your motive. You seem to espouse a desire to discover or invent something thru science, that would bring a societal windfall of betterment, no? And not for the money, but for the love of advancing science.

Sounds all well and good, however, you're not "that unique". There's plenty of humans on this planet capable of carrying out the work in sciences that could advance all of humanity, if not bound by the grips of politics. Would your time and efforts be better served, developing a means by which more people (interested in sciences) could become wealthy (enough) to carry out scientific research on their own?

How many quants and used hedge fund salespeople aren't in it for the money? I, for one, could see more utility in Rin developing a means to allow more people to devote their time to science, unmolested by political monied interests. Making it possible for more people to become "wealtthy" enough,,,, perhaps you've actually had a thread where you talked about this, if I recall. Stick to your knitting

@ curious

You'd better hope that no green zeros hit!

errc says

You'd better hope that no green zeros hit!

That's why I named the manager Houdini, and pointed out the risk of loss is mainly on the investors. He can still escape with his 2% management fee, perfectly legal as long as he's dealing with "accredited investors" (and almost anybody who owns even a 1br shack in Stockton is now rich enough to be "accredited", thanks to QE & ZIRP propping up the price of shacks).

BTW, I don't mean any disrespect for the original Harry Houdini, a great performer who took all the risks himself and died practicing a dangerous craft. I borrowed his name because it has become synonymous with great escapes. The last attempt didn't work out so well for him, but he remains worth remembering.

curious2 says

how do the investors believe in it?

My firm works with portfolio & asset management types and our pitch to their clients is that we provide the 'alpha' (meaning higher risk, higher profit, but with strict controls [ & some of that is proprietary knowledge ]) to a portfolio, which sticks with the basics, a.k.a. beta, where investors get a lot of their returns from dividends and ordinary cap gains. Thus, if a foundation is happy, risking 15% of their trading portfolio to our company, chances are they'll be adding a nice layer to their balance sheet when the year is up. Since some portfolio managers have several firms in mind, we also encourage splitting pools, so that some clients can test us out for a year, before increasing their commitment.

errc says

Making it possible for more people to become "wealtthy" enough,,,, perhaps you've actually had a thread where you talked about this, if I recall. Stick to your knitting

I think that was my idea of the science/engineering sponsorship state, where S&Es will get a basic stipend, if they pass a series of S&E exams.

As far as funding it goes, I don't think an ordinary financial firm can make it happen, including the Gates/Buffet foundations. It'll have to be lobbied through the Dept of Defense, since those are the deep pockets in DC.

errc says

you're not "that unique".

I had pondered that idea that perhaps ... I might not be all that good, despite my early research and publication success during college years.

I think that even if I'm no Gibbs, Bohr, Maxwell, or whomever, from science's luminary past, I don't think it really matters.

What matters is that ability to follow one's passions and be able to draw from intuition, inspiration, or what have you. Success or failure only matters if one needs a paycheck.

Yes, you don't want to fail in a career where your work results in a 1099 or W-2. And sure, many who're willing to study and log a few hours can become an accountant or nurse.

There are plenty of retired persons today who oil paint. Clearly, most of them will never expect their work to be seen in the Rembrandt, Van Gogh, or Picasso exhibits of the 22nd century but does it really matter to them?

"The happiest profession is being independently wealthy"

You mean I don't have to be someone else's bitch? I totally agree. Haven't had a W-2 job for over 4.5 years and don't plan on ever going back to the W-2 world. Not independently wealthy, but I'm quite happy with my profession, and that's being a stay-at-home dad while investing in real estate part-time.

E-man says

but I'm quite happy with my profession, and that's being a stay-at-home dad while investing in real estate part-time

However you can do it.

The thing is that there are all these clowns who say that 'money doesn't buy happiness' but yet, this clown contingency is working for some loser corporate (or academic) America entities and yet, they can't see the fact that they're little more than indentured servants, making a living, doing as they're told.

"The happiest profession is being independently wealthy"

"Independent" of what ? ever job is dependent on some
other parties and economic well being. When it goes bad
it goes bad for all... dont matter even if you are a RE investor
who rents out property.. with job loses come decline in incomes
and thus fall in rental income..

thomaswong.1986 says

"Independent" of what ?

Yes, and that's why it's critical to live within one's means, even if one's rich because residual income will come and go. Thus, that expensive yacht, a money sink, has nothing to do with being independent but more a sign of being ostentatious.

But yet, knowing that the general economy comes and goes, gives one an idea that with a certain minimum amount of dividend income, the prop tax, maint, food, and health insur costs are covered. And that's the base and to keep one's lifestyle as close to that base, until one's capital grows to a higher echelon.

Rin says

And how a proper audit trail,

I find an audit trail is necessary, even on an in house program that only a few people are using. Too bad the designers of the various Obamacare site couldn't figure this out.

zzyzzx says

I find an audit trail is necessary

Yes, in fact, we even start that before a trade is executed. That's a part of our proprietary system, using a bit of fuzzy controller logic, with the key inputs being company secrets, to assess the transaction and assign it a key valuation parameter.

Then, when we run our monthly reports, we can determine the stats of how our assignment algorithm is working against the P/L. So far, so good; and it's been key in getting clients to commit to our firm and has also helped our prop traders in limiting their loss column.

I'm assuming that some time back in the middle ages, the lifestyle I'm advocating is like being a monk, but with regular access to a brothel with food and whiskey.

Today, no such luck ... you need money for housing, food, b**bs, and booze.

Rin says

I'm assuming that some time back in the middle ages, the lifestyle I'm advocating is like being a monk, but with regular access to a brothel with food and whiskey.

Today, no such luck ... you need money for housing, food, b**bs, and booze.

Medieval monks were not exactly chaste, nor teetotalers of excess food or strong drink:

In early feudal times, the marriage day might have ended differently, with the feudal lord deflowering the new bride, before releasing her to her husband. The existence of this 'jus primae noctis, also known in France as "jus cunni", in England as "marchette", in Piedmont as "cazzagio", has been much disputed, but Ducange has provided detailed evidence and the best authorities now accept that it existed; (190) cases are even known where monks, being at the same time feudal lords, held this right — for instance the monks of St. Thiodard enjoyed this right over the inhabitants of Mount Auriol. (71)

http://www.ourcivilisation.com/smartboard/shop/taylorgr/sxnhst/chap2.htm

Monks were equally serious about drink. In his Rule Benedict admits to some misgivings about recommending how much anyone ought to drink but bearing in mind ‘the standards of the weak’ he recommends a hemia (half a pint) of wine a day. Mark you – it was only a recommendation, and the monks treated it with caution. Recent studies have shown that alcohol seems to have accounted for something like 19 percent of monk’s energy intake (it provides 5 percent of ours)....

...Records for 1447 note a brothel in Westminster called the “Maidenshead”, which was much frequented by Benedictines. With up to 12 pounds pocket money a year , the monks could afford to go there. And churchmen did not just use brothels, they owned them. The bishop of Winchester was the owner of one of the brothels in Borough High Street in London – the girls were known affectionately as “Winchester geese”.

http://books.google.com/books?id=4T909PAV8GkC&pg=PA109&lpg=PA109&dq=medieval+monks+brothels&source=bl&ots=QPSbxp70Ae&sig=ZQ3LGZrzvvbNlbCU5ErjrpG2skk&hl=en&sa=X&ei=6ARgU5TlIdipyATkgIG4Ag&ved=0CGkQ6AEwBw#v=onepage&q=medieval%20monks%20brothels&f=false

http://www.youtube.com/embed/Ks9GZqQ8P88

New Renter says

Medieval monks were not exactly chaste

Nor modern priests.

New Renter says

...Records for 1447 note a brothel in Westminster called the “Maidenshead”, which was much frequented by Benedictines. With up to 12 pounds pocket money a year , the monks could afford to go there. And churchmen did not just use brothels, they owned them. The bishop of Winchester was the owner of one of the brothels in Borough High Street in London – the girls were known affectionately as “Winchester geese”.

Which shows, once again, that money brings happiness.

I find it a lot easier to solve STEM problems, after a good bo*nk.