How many online pros average +500k a year in the world?

[bustedromo]

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Regarding fund managers...

This is way off topic but there is a lot of evidence that they really don't contribute anything. They provide superior returns but only if you fail to adjust for increased risk, and they pretty much rip off their customers in terms of fees.

If they were in fact providing abnormal returns they would at least be making the market more efficient, even if they were still ripping off their clients. As it is I really don't think they do anything except add a little volatility.

(There are some outlier funds that really do seem to provide abnormal risk-adjusted returns, to be fair.)

BTW - My main source for this is a recent New Yorker article, but people in the press and academia and other areas of the financial world have suspected this for years.

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In the equities and equities derivatives trading biz, mutual fund managers are generally known as chumps. Most of them have no clue how markets actually work and are taken on a regular basis by market-makers. If you talk to fundies, they'll tell you that on the strategic scale they think at, playing the trading game is irrelevant (i.e. their losses due to "friction" is a tiny fraction of their potential inaccuracy on entrance/exit points in a directional trade). In this manner, (on average) they manage to piss away any risk-adjusted fees-adjusted advantage they really offer over the indexes. As you might expect, they're mostly delusional about the advantage their skills really do offer.

The mutual fund game is really all about marketing and risk-control on the minus side. Get as much money under management as possible, charge the highest fees possible, avoid losing money because losing money=losing customers.

To be fair to the managers, the game is somewhat rigged against them because the marketing-driven nature of the business usually sets some parameters on what they can be invested in, and what % of the money must be invested, that are difficult to work around. But even with that in mind, these guys are mostly turkeys.

What about hedgies ? Hedge funds used to be where all the really talented people ended up eventually (because of the pay structure, and the freedom to do the really interesting trading). And due to this talent, and the freedom to run the money as they please, hedgies do offer far better edges on the indexes than fundies (in the good old days, 40% was expected from a hedge-fund). However, these increased edges comes at the price of variance, and so hedge funds are not for everyone.

In recent years, visibility of hedge funds has moved out of the very private enclave of the very rich and caught the public eye. Consequently all sorts of clowns who don't know what they're doing have gotten involved, and thus we have record hedge fund collapses, with far more to come.

What's the lesson ? If you want your money run by people with real skill who can get you a true edge on the indexes, you need to accept that there will be significant variance in your returns. Kind of like the bankroll realities of being a poker pro.

Do managers of hedge funds and mutual funds add economic value ? Well, if you want all that saved money of the world's well-off people put to work out there acting as capital investment in the economy, then it's almost inevitable that there will also be a bunch of human beings out there managing large portions of it (due to the sales/marketing driven nature of capitalism). As is true in any game, the majority of these players are suckers whom the minority of real talent feed off. It's really quite similar to the poker world.

[Micturition Man]

Bustedromo-

I was actually referring exclusively to hedge fund managers. I think it's pretty much proven fact at this point that mutual fund managers are worthless.

[Abbaddabba]

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How many 2+2ers made over 500K last year and are on pace to make over 500K this year?

Surely not that many, right? Maybe 20?

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Most of the ones who are on pace to make that much dont spend a lot of time reading NVG.

[stigmata]

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D,

"the comparison to some corporate employee is ridiculous, especially in the propaganda style way ElD presented it."

It's less a comparison and more an observation.

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The average American earns approximately $15000, although this is also kinda irrelevant tbh...

[bustedromo]

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Bustedromo-

I was actually referring exclusively to hedge fund managers. I think it's pretty much proven fact at this point that mutual fund managers are worthless.

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As you know, everything in this universe moves in cycles.

Right now, the hedge fund industry is full of imposters. Just like in the late 1990s the venture capital industry was full of imposters.

It's takes a while for the bad decisions of the imposters to play out. Lots of people have to lose their money, lots of managers have to lose their jobs and funds, and the industry has to take a big hit credibility-wise, before it can return to its true form.

But these wash-out cycles are worth it. The VC industry of today is far more efficient than the VC industry of 7 years ago.

Many among the very rich who can sustain significant variance in their investments have long known that a good hedge fund provides a significant fees-adjusted risk-adjusted edge over the indexes. But you have to do your homework and you have to monitor changes in your hedge fund's management team and customer base. For my money, the best hedge funds are relatively small and stable both in terms of both the amount of money they run and the turnover amongst key people. And that's the type of operation I work for as well.

[ggbman]

Leatherass, aside from this year, how many 500k years have you had? And what were the approximate earning these years?

[ohead]

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D,

"the comparison to some corporate employee is ridiculous, especially in the propaganda style way ElD presented it."

It's less a comparison and more an observation.

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The average American earns approximately $15000, although this is also kinda irrelevant tbh...

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15K?? you have any source for this?

[Sciolist]

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i completely agree..if i wasn't a lazy piece of [censored] i would be able to rake it in, I just personally think most poker players are susceptible to lazyness, god knows if i spent more time playing and less time at the bars with with friends I'd prolly be able to get up to 500k..

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I agree with both of you, everyone who logs onto an online poker site should be able to get to 500K annual, with nothing more than good work ethic, and sickkk online poker skillz, this should all be very LDO

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I disagree. The games will get much tougher because you'd need a corresponding increase in casual and/or bad players playing too. The games get tougher, your win rate drops perhaps to breakeven or worse, so it's harder to make that much money. I suspect that whilst a lot of people have the potential to make $500k pa, if they ALL actually tried, they won't make it.

[Sciolist]

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100% - They ain't pro unless they making $500k+, thats £250k in England, couldn't even by you a decent house.

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If you define being a professional as someone who makes enough to buy a house a year, I think you'll find that 99.99% of the British population is unemployed

[Sciolist]

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D,

"the comparison to some corporate employee is ridiculous, especially in the propaganda style way ElD presented it."

It's less a comparison and more an observation.

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The average American earns approximately $15000, although this is also kinda irrelevant tbh...

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It's also really wrong - GDP per capita PPP is $44,000 (2006 est) says CIA World Factbook.