50% returns on small amounts?

[stinkypete]

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Carl Icahn's hedge fund was up 56% last year and he took 50% profits. He is on pace to break that this year. He owns more than 13% in BEAS, which just recieved a buyout offer from Oracle. Icahn is up more than 50% in this holding since taking a stake in that company. This should boost his whole portfolio up by 3-4%.

You're stupid if you don't think Icahn can average 50% returns over any period of time(even 50+ years) if he was controlling a more modest amount, like 1,000,000.

And you don't just have to be a hedge fund manager or insanely talented. Look for emerging markets, learn T/A, learn F/A, seek undervalued stocks, insider buying, listen to the conference calls, learn options, and always follow the global/domestic economy.

Averaging 50% per year is DEFINITELY sustainable.

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while you might be right, if you think that making 50%/year over 2 years in a bull market (with leverage?) is evidence of 50% being definitely sustainable, you are severely mistaken.

[Henry17]

Carl Icahn is not a suitable example for what you are trying to prove. He is not a passive investor. The reason BEAS is up 13% is because Icahn bought it. Had I bought the same amount of stock instead of Icahn BEAS would not have gone up. So yes someone like Carl Icahn might be able to sustain very high returns but normal mortals have such a low probability of sustaining 50% returns over a 10 year period that it is safe to say the probability is zero.

[Statutory]

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As an aside, I also qualified for a $50k business credit card from Capital One but couldn't bring myself to use it as the interest rate was 12% and it seemed too much hassle for the excess returns. But I wonder why a professional player wouldn't use something like that to help ride out bankroll swings and move up faster.

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It's basically a myth that bankroll constrains a pro poker player. Generally skill is a far more limiting factor. By the time you have the skill you have more than enough roll.

Krishan

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You have to be the laziest Mo Fo around for this not to be true.

Or possibly, you pissed your BR being a degen in some other area of life. Even then you can grind it back from $100 in a month or two.

[TrainHardDieHard]

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Carl Icahn is not a suitable example for what you are trying to prove. He is not a passive investor. The reason BEAS is up 13% is because Icahn bought it. Had I bought the same amount of stock instead of Icahn BEAS would not have gone up. So yes someone like Carl Icahn might be able to sustain very high returns but normal mortals have such a low probability of sustaining 50% returns over a 10 year period that it is safe to say the probability is zero.

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First, you didn't even correctly read my post. BEAS is up 50% since Icahn bought it. He OWNS a 13% of the COMPANY. Its up because it receieved a BUYOUT offer from ORACLE.

Second, another reading failure, in my post directly after the Icahn story, I mentioned how you do not have to be a hedge fund manager to sustain those rates. If you put the effort into learning some analysis, ect., 50% is definitely sustainable for an intelligent trader/investor.

[Henry17]

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First, you didn't even correctly read my post. BEAS is up 50% since Icahn bought it. He OWNS a 13% of the COMPANY. Its up because it receieved a BUYOUT offer from ORACLE.

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Actually no. BEAS went up 5% the day Ichan disclosed his stake in the company on speculation that he would force a sale.

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Second, another reading failure, in my post directly after the Icahn story, I mentioned how you do not have to be a hedge fund manager to sustain those rates. If you put the effort into learning some analysis, ect., 50% is definitely sustainable for an intelligent trader/investor.

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I know you said that. I'm saying it isn't possible. If there was a way to test it now I would wager my entire net worth that you could not exceed 50% a year for 10 years without doing anything illegal. Unfortunately there is no way to prove that short of waiting 10 years and then checking in with you again and that is just too much work.

How many years in a row have you managed to make over 50%?

Also I don't mean to be a prick but you start a thread asking how to calculate compound interest and then you turn around and claim you can generate 50% returns. Why would anyone believe that given you can't do basic math?

[Jimbo]

I made 86% on a covered call option today. Does that make me a stock savant? Please tell me how long before I have too much money so that I won't be able to sustain my 86% per day increase.

Jimbo

[pig4bill]

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If you could easily sustain 50% rates on small accounts you could grow $50,000 to $1million in just about 7 1/4 years and grow it $10,000,000 in about 13 years.

If you could do this why wouldnt you simply grow you're account to 1-2 million and then just live like a rockstar off the $500,000 -$1,000,000 youre bringing in every year?

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Why not, indeed? Some of my trading buddies do.

[pig4bill]

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Pig4bill,

I still feel like I am correct in the sense that you can run well in the stockmarket and run poorly as well. Sure you may have a great investment idea but just like in poker there are many things you cant control so variance comes into play. Fpr example, that sector of the economy heats up, the government passes some new legislation ect. ect. There are many things that can happen that will make you look like a genius or an idiot but a smart person realizes he is somewhere in between

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Yeah, shift happens. You lose from time to time. That's why you might only make 50% instead of 80%. But those freak occurrences happen in a small minority of your trades.

BTW, some of my trading buddies would consider 50% to be a bad year.

[pig4bill]

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Pig4bill,

I still feel like I am correct in the sense that you can run well in the stockmarket and run poorly as well. Sure you may have a great investment idea but just like in poker there are many things you cant control so variance comes into play. Fpr example, that sector of the economy heats up, the government passes some new legislation ect. ect. There are many things that can happen that will make you look like a genius or an idiot but a smart person realizes he is somewhere in between

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Long Term Capital Management was formed by the smartest people in the investment business including Nobel Peace prize winners. Initially they raked up returns approaching 40% per year using bond arbitrage strategies. The Russian Financial crisis led to a flight to quality and their arbitrage positions rather than converging, actually diverged. Exacerbated by heavy leverage huge losses ensued and the fund eventually failed.

These guys were very smart until the unforeseen (variance) happened.

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They were counting on the kind of mathematical principles that bring you concepts like variance. See where it got them?

[Shoe]

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Pig4bill,

I still feel like I am correct in the sense that you can run well in the stockmarket and run poorly as well. Sure you may have a great investment idea but just like in poker there are many things you cant control so variance comes into play. Fpr example, that sector of the economy heats up, the government passes some new legislation ect. ect. There are many things that can happen that will make you look like a genius or an idiot but a smart person realizes he is somewhere in between

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Yeah, shift happens. You lose from time to time. That's why you might only make 50% instead of 80%. But those freak occurrences happen in a small minority of your trades.

BTW, some of my trading buddies would consider 50% to be a bad year.

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I consider 50% to be a bad year as well. I just haven't been able to prove it yet.