# These traders are doin' OK!



## wayneL (22 June 2006)

Hi Folks,

"Traders" have been copping a bit of flak in this forum, being whopped over the head with the ubiquituous "Buffett" club.

Well these chaps are traders and they're making enough to pay the groceries....even after all that brokerage  

Interesing paragraph down near the bottom.

http://biz.yahoo.com/usat/060526/13568510.html



> USATODAY.com
> $363M is average pay for top hedge fund managers
> Friday May 26, 12:16 am ET
> By Adam Shell, USA TODAY
> ...


----------



## NettAssets (22 June 2006)

It just goes to show you're better off on wages than trading for yourself.
And is 300 Million going to be a living wage in this new round of inflation.
John


----------



## wayneL (22 June 2006)

NettAssets said:
			
		

> It just goes to show you're better off on wages than trading for yourself.
> And is 300 Million going to be a living wage in this new round of inflation.
> John




Living frugally, I reckon I could just scrape by. HAHA


----------



## NettAssets (22 June 2006)

Be a mongrel to have to sell the Lear
John


----------



## wayneL (22 June 2006)

NettAssets said:
			
		

> Be a mongrel to have to sell the Lear
> John




Hah! Being the nostalgic retro type bloke I am, I'd wouldn't mind settling for a second hand 747 anyway.

Gawd life's a byatch!


----------



## Nick Radge (22 June 2006)

You guys have it wrong. These "payday's" are based on funds under management, not trading profits. The goal is to have as much under management as possible rather than make monster money.

Look at the BRW Young Rich List. You will see Richard & Angus Grinham. Both in their 30's (their ofices are in Crows Nest) making about $50m from managing money trading futures using technical analysis. The money they make is generated from the management and performance fee's based on the US$1 billion they manage. Their annual returns are about 10%.

Also look at Toby Crabel who managed over US$1 billion. . Makes about US$100m a year in fee's. His annual returns are 9%. What makes him so good is that he makes 9% regardless of what any other core portfolio is doing and also does so with amazingly low volatility. He's almost like a turbo charged cash management account. 

Great trader or great funds manager?

The best quote I ever heard was from Tudor Jones:

"Some perople make houses. Some people make shoes. I make money and people are willing to pay me a lot to do that"

On a side note. Those knuckle heads at Intelligent Investor said you'll never find a rich technical analyst. Grinham's are in their own backyard!


----------



## NettAssets (22 June 2006)

Hi Nick
Thats a bit of a chicken and egg augument isn't it ?
If they didn't have the results they would not have the funds under management.
John


----------



## Ageo (22 June 2006)

hmm 2% management fees of a $billion dollars is not too bad. So who's ready to go out on a limb and start there own fund? heheh

Wayne just tell them returns over 400% is nothing to us. (That way they start to flock in hehe).


----------



## Realist (22 June 2006)

> being whopped over the head with the ubiquituous "Buffett" club.




 


Well the lady below is a gambler, and she's made enough to pay the groceries.... 



> Old bag wins lotto!!
> 
> After 45 years of wasting her weekly income on pokies, keno, lotto and scratchies, Esther Smith or Bonnydoon won $16M on Powerball last week. She recommends everyone buys as many lotto tickets as they can afford.  "If I can do it anyone can" said Esther.




Just kidding. But I'm sure you get my point.  Trading and gambling works for some. Investing works for everyone.   :


----------



## It's Snake Pliskin (22 June 2006)

Realist said:
			
		

> Well the lady below is a gambler, and she's made enough to pay the groceries....
> 
> 
> 
> Just kidding. But I'm sure you get my point.  Trading and gambling works for some. Investing works for everyone.   :




We need guys like you Realist. I@m sure you realise what I mean.


----------



## Realist (22 June 2006)

> We need guys like you Realist. I@m sure you realise what I mean




not really sure what you mean.    

But it would be pretty boring here if everyone agreed.

I love baiting traders - it is excellent fun..


----------



## Staybaker (22 June 2006)

Nick Radge said:
			
		

> You guys have it wrong. These "payday's" are based on funds under management, not trading profits.



Hmmm, not so sure about that (although you are no doubt right in some cases). Simons, for example, gets 44% of _profits_ according to the article, so a bigger profit translates quickly to a bigger payout for him. Not only that, but these guys have lots of their own money in their funds. And finally, I seem to remember reading that these US hedge fund returns were much higher than the 10% or so that you mention (I could try and find the reference again if you're interested). In a nutshell, I'd say that high profits are _very_ important to them.

Cheers, Staybaker.   

PS: Guys, the plural of "fee" is "fees", not "fee's".


----------



## bullmarket (22 June 2006)

Realist said:
			
		

> I love baiting traders - it is excellent fun..




just as well for me then that I am an investor whose number 1 priority nowadays is income and not capital gains   

cheers   

bullmarket


----------



## bunyip (22 June 2006)

Nick Radge said:
			
		

> Look at the BRW Young Rich List. You will see Richard & Angus Grinham. Both in their 30's (their ofices are in Crows Nest) making about $50m from managing money trading futures using technical analysis. The money they
> 
> On a side note. Those knuckle heads at Intelligent Investor said you'll never find a rich technical analyst. Grinham's are in their own backyard!




Nick....Where is Crows Nest?


----------



## Ageo (22 June 2006)

Snake Pliskin said:
			
		

> We need guys like you Realist. I@m sure you realise what I mean.





You mean we need people to not become wealthy so they still work? hehhe


Bunyip Crows Nest is in Sydney


----------



## coyotte (22 June 2006)

bunyip said:
			
		

> Nick....Where is Crows Nest?



Northern Suburb of Sydney (north shore)


----------



## bunyip (22 June 2006)

Northern suburbs of Sydney eh? Righto, thanks lads.


----------



## Realist (22 June 2006)

> You mean we need people to not become wealthy so they still work? hehhe




Hahaaa.

There was some guy in the 1980's or 1990's whose motto was "Everybody can be rich!!"

Needless to say he was a laughing stock a few years later, and still a running joke.

Yeah I aint rich, I have to work.      

I will be rich though eventually, and that is more than most people can say.


----------



## Ageo (22 June 2006)

Realist said:
			
		

> Hahaaa.
> 
> There was some guy in the 1980's or 1990's whose motto was "Everybody can be rich!!"
> 
> ...





hehe i hope you didnt take offense mate its all good. And yes you are right most people will never become rich simply because they are telling themselves that from day 1.

Good to see you're on track


----------



## Nick Radge (22 June 2006)

Chicken & Egg.. or a good business model?

Is making a 10% annualised return make you a good trader? Apparently not to the vast majority of people who have no respect for risk adjusted returns. 
However, in the world of alternative investments its everything. Let's assume my info on the Grinhams is correct (I personally know them so we might be able to squeeze that assumption through), they have been trading for 16-years with an annualised return circa 10%. 

Look at Echardt. He has an annualised return of 27% yet manages just $250m. This is because his maxDD is closer to 40% and is too volatile. Whereas someone like Crabel who has an annualised return nearer 10% with a minimal drawdown managed over US$1 bill because he is Mr Consistent AND Mr Low Risk.

Assuming Richard Grinham was straight out of Uni 16-years ago, what capital do you think he started with to making $30m a year from trading profits at 10% annualised?

Also note that many of these fund manager DO NOT have their own funds in the same fund. Some do, yes, but others don't. This is because it allows them to remain psychologically detached from the process and not tinker with the system during bad times.


----------



## BSD (22 June 2006)

Nick Radge said:
			
		

> Is making a 10% annualised return make you a good trader? Apparently not to the vast majority of people who have no respect for risk adjusted returns.
> 
> They have been trading for 16-years with an annualised return circa 10%.




Exactly right. 

'Risk adjusted' is the key and the further we get from the last bear market the more people forget.


----------



## Realist (22 June 2006)

> Is making a 10% annualised return make you a good trader?




After all expenses and taxes are removed the answer is..

Not last year.

But over the longterm, the last 16 years, probably the next 10 years, yes 10% annual return is quite good.

I'm amazed at the people that think they can consistently and significantly outdo the market.  Many have tried, few have succeeded.

I think my signature says it all about this subject.


----------



## NettAssets (22 June 2006)

Nick Radge said:
			
		

> Chicken & Egg.. or a good business model?
> .....
> Assuming Richard Grinham was straight out of Uni 16-years ago, what capital do you think he started with to making $30m a year from trading profits at 10% annualised?
> ......



Do these guys usually start as trainee with another trader or do they get an account with an overseer
JohnH


----------



## BSD (22 June 2006)

Realist, these blokes and some others like them, are generating these returns with volatility akin to a bank bill. 

Your strategy (and your volatility) is essentially linked to the equity market of one country. 

That is what makes the difference. 


That said, you need to also understand how they are making the money before getting excited. 

If they are clipping small tickets but remaining exposed to some fat tail event - the low vol may be a mirage. 

*I am not familiar with the strategy of these guys.*


----------



## Staybaker (22 June 2006)

OK, I found the article I referred to earlier - it's available here.

Top-ranked Renaissance Technologies (James Simons) returned 29.5 percent net last year - the "net" result being after a 5% management fee and a 44% performance fee were taken out. The gross return was 60%. It has a 34% annualized net return since its 1988 inception. Pretty impressive. No mention of risk-adjusted return or Sharpe ratio, though.

Cheers, Staybaker.


----------



## professor_frink (11 July 2006)

Nick Radge said:
			
		

> Chicken & Egg.. or a good business model?
> 
> Is making a 10% annualised return make you a good trader? Apparently not to the vast majority of people who have no respect for risk adjusted returns.
> However, in the world of alternative investments its everything. Let's assume my info on the Grinhams is correct (I personally know them so we might be able to squeeze that assumption through), they have been trading for 16-years with an annualised return circa 10%.
> ...




Hi nick,
Is there anywhere I can find out about the returns/drawdown of some of these people? Is there a website somewhere that lists this kind of thing?


----------



## Shane Baker (12 July 2006)

PF

http://www.iasg.com

Cheers

Shane


----------



## professor_frink (12 July 2006)

thanks for that shane


----------



## Nick Radge (14 September 2006)

Anyone read BRW Yound Rich List? The boys Grinham moved to #2, up $200m this last year.


----------



## robots (14 September 2006)

hello,

look at rozella's tech, looks like he is creaming most of the big names

wouldnt mind seeing him controlling those sort of sums


thankyou
robots


----------



## Milk Man (14 September 2006)

Nick Radge said:
			
		

> Anyone read BRW Yound Rich List? The boys Grinham moved to #2, up $200m this last year.




Just one problem Nick. Under 40 doesn't make you young. : 
Pass on my congrats to them.


----------



## nizar (13 April 2007)

Nick Radge said:


> Chicken & Egg.. or a good business model?
> 
> Is making a 10% annualised return make you a good trader? Apparently not to the vast majority of people who have no respect for risk adjusted returns.
> However, in the world of alternative investments its everything. Let's assume my info on the Grinhams is correct (I personally know them so we might be able to squeeze that assumption through), they have been trading for 16-years with an annualised return circa 10%.
> ...





Interesting post Nick...


----------

