Really Rich Guys - Top 10 Traders

[Kevroc]

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The Black Swan, which came out last week, is as good or better than FBR.

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Agree - fascinating read. I'm going to reread it actually...

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LOL, TheBlackSwan is my name on WPEX.

[DcifrThs]

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Finance guys,

Does broader access to more sophisticated and configurable algos as well as the ability to get real-time feedback on their performance make it harder for hedge fund guys to separate themselves from the pack in terms of consistently outperforming returns? Is stuff like that pushing them to make higher and higher variance plays?

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Don't hedge funds now days essentially copy index funds and make slight changes to add +5% on their return, thus turning them into hyper index funds?

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from what i understand, tons of money is dedicated to variations on themes of XYZ managers.

for instance, lets say investor X wants to hire a US Lehman Agg bond manager. what this means is simply taking the lehman agg, replicating it one way or another and then giving some type of leeway to a bond manager to take strategic variations around that benchmark (index fund or whatever you want to call it...i'll call it a benchmark b/c the manager is being compared as we'll see in the next sentence to that index or benchmark). the "alpha" or the profit delivered by this manager is the investment's total returns minus the total return of the benchmark.

so yes, some hedge funds do copoy index funds and make slight changes to add some % to that return. but they do this by design and request...unfortunately, this practice has one major (and some other minor) problems...

the main problem is that the manager's returns are often highly correlated with the benchmark returns. it would be far better to give money to an uncorrelated alpha source after replicating the desired benchmark using leverage or leverage like methods. this would be far better since the performance of the benchmark wouldn't necessarily correlate with the manager's returns.

Edit: i went on a tangent and missed the point of your question which was do most hedge funds do this. Daver was more correct in his short answer: no they don't. only a few do and they specialize in that for many clients. most hedge funds do not engage in that type of management directly (or with that expressed purpose)

Barron

[DcifrThs]

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I just read that Goldman and other top bulge-bracket firms average bonii were in the 150k range this year to stop poaching from hedge funds.

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lol. that wouldn't do much unless they were trying to keep their janitors from defecting...

Barron

[DcifrThs]

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The Black Swan, which came out last week, is as good or better than FBR.

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Agree - fascinating read. I'm going to reread it actually...

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ordered...any other suggestions?

Barron

[gomberg]

Books I've enjoyed the last couple years from this industry (other than the Taleb ones):

Poker Face Of Wall Street by Aaron Brown
Fortune's Formula : The Untold Story of the Scientific Betting System That Beat the Casinos and Wall Street by William Poundstone

[Kevroc]

Fooled by Randomness anyone?