Another Investment Fish Seeks Advice

[PRE]

I would put it all in Citadel.

[DesertCat]

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I also have a really good connection who has gotten me into the "Citadel" Hedge Fund as of the first of this month. I have put $50,000 dollars into this one. From what I hear it's one of the best in the world and this is a tremendously profitable investment from an EV standpoint although it carries some risk. With the credit cruch, should I be looking to put more into this for my next investment?

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This sounds very strange. From your description you are not qualifed to be a hedge fund investor (look up "accredited investor"), so to let you in a fund the fund principles have to waive some basic rules meant to protect them from lawsuits.

Secondly, what hedge fund would accept only $50k? I can understand a tiny hedge fund accepting small amounts like that when they get started, but not one of the largest funds in the world. Typically large funds may have minimum investment levels from $5M and up.

Are you sure your "connection" got you into the hedge fund? that's it's not a mutual fund they market (which is a different beast altogether), some watered down version of what made them successful in the first place? Either way you are better off in index funds, which over time beat most active managers, including the typical hedge funds.

Your wisest advice has come from Ray Zee. Go to Vanguard, put everything in an index fund or even better, something like their 2050 target retirement fund. It's a fund with very low costs and is regularly rebalanced the fund returns will stay as high as possible while you are young, but will trade excess returns for reduced volatility as you approach retirement in 2050. If you don't want to retire in 2050, they have a 2045 fund, a 2040 fund, etc.

[SlowHabit]

[ QUOTE ]
[ QUOTE ]
I also have a really good connection who has gotten me into the "Citadel" Hedge Fund as of the first of this month. I have put $50,000 dollars into this one. From what I hear it's one of the best in the world and this is a tremendously profitable investment from an EV standpoint although it carries some risk. With the credit cruch, should I be looking to put more into this for my next investment?

[/ QUOTE ]

This sounds very strange. From your description you are not qualifed to be a hedge fund investor (look up "accredited investor"), so to let you in a fund the fund principles have to waive some basic rules meant to protect them from lawsuits.

[/ QUOTE ]
This was the first thing that popped into my mind.

[revlis87]

Guys,

I can get into Citadel because I have a family member who has like $20 million in there so it is going in under his name. This is not a guy who needs my money. He owns a proprietary (sp?) trading company with offices in 5 different countries from Singapore to Madrid to Chicago to London to Mumbai. I'm not concerned he's trying to rip me off - he's just doing me a favor. He has done the same for other members of my family and we have a close relationship. He has set up something called a "family parternship" so I assume that's what I would be going into.

Look, suspend all disbelief. I can get my money into Citadel and it's legitimate. Assuming that is the case, should I still really be looking to put all my money in an index fund? Aren't I at the point in life where I should be taking some risk? Especially given that I am going to be making at least a decent amount of money in the next few months if not years? Is the risk really that much lower in the index fund that I should give up so much EV? From what I hear, Citadel isn't just any hedge fund - it's pretty incredible opporunitiy. Am I wrong in my thinking?

FWIW I'm not going to put every penny i have in Citadel - I will leave some in a Vanguard thing, but I am leaning towards putting it heavily into Citadel... Why is this wrong?

[jumbojacks]

[ QUOTE ]
Guys,

I can get into Citadel because I have a family member who has like $20 million in there so it is going in under his name. This is not a guy who needs my money. He owns a proprietary (sp?) trading company with offices in 5 different countries from Singapore to Madrid to Chicago to London to Mumbai. I'm not concerned he's trying to rip me off - he's just doing me a favor. He has done the same for other members of my family and we have a close relationship. He has set up something called a "family parternship" so I assume that's what I would be going into.

Look, suspend all disbelief. I can get my money into Citadel and it's legitimate. Assuming that is the case, should I still really be looking to put all my money in an index fund? Aren't I at the point in life where I should be taking some risk? Especially given that I am going to be making at least a decent amount of money in the next few months if not years? Is the risk really that much lower in the index fund that I should give up so much EV? From what I hear, Citadel isn't just any hedge fund - it's pretty incredible opporunitiy. Am I wrong in my thinking?

FWIW I'm not going to put every penny i have in Citadel - I will leave some in a Vanguard thing, but I am leaning towards putting it heavily into Citadel... Why is this wrong?

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DC just made the point that the $50k investment is very unusual just by itself given the size of Citadel and their typical investment minimums. Now that you mention it's part of a much larger investment pool and by your description, it definitely sounds legit. There are a lot of situations/opportunities that range from great (in the case of Citadel, highly exclusive, etc.) to downright scams. Just looking out since you are fish... [img]/images/graemlins/grin.gif[/img]

I'm still learning a great deal too on these boards, but from what (little) I know, I'd put in a ton into Citadel for a few of the reasons previously mentioned.

[SteveOMS]

I wouldn't go too overboard on the Citadel from the get go. This money will be totally Illiquid and untouchable for YEARS by you. I think your a bit young, without a ton of assets to really go heavy here, especially being 'self employed' playing poker and the variances that go with that. 65% allocation seems way too high.

Most 'new investors' money that goes into big hedge funds come from some sort of fund of fund arrangement, or family member or the like.

SteveOMS

[APXG]

Investing through a family friend / relative is an even more perfect scenario than investing into citadel straight up b.c. the relative acts like an FDIC in most cases. The last thing rich relatives want to do is jeopardize relationships over what to them are insignificant sums of money. Otherwise, it would contradict their reasoning for allowing you a free chance at what is in essence a +EV opportunity that belongs purely to them.

[technologic]

as your cashflow seems to be large compared to your net assets, i'd say put as much as you can in citadel. these funds should be not part of your bankroll that you require to play, or any cash that you hope to spend in the next 3-5 years, however.

[Tupacia]

As long as you have no immediate need for the money, I would put as much as you can into Citadel. It is a top 5 hedge fund no matter who you ask. Be sure you understand what you're getting yourself into in regards to the family friend situation though, and try to get a written contract if possible.

I would get as much money as you can into Citadel, with the only exception being a few hundred dollars to buy the family friend who's allowing you to piggyback a nice bottle of wine as thanks.

[DesertCat]

It sounds legit. What returns has it averaged and how large was it when it compiled its record. I.e if it has crushed the market while at its current size its a great opportunity.