# 20% above cash guaranteed: Would you invest?



## Trembling Hand (30 July 2009)

Just purely as  hypothetical (nick off ASIC I'm not raising funds without a lic or prospectus) 

If a hedge fund offered you 20% return above Australian cash rate annually would you invest in that fund? Even if they were making 60% returns or greater.

Would you feel cheated if you were only getting 30% of the profits? If your return was 20% but no more or no less.


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## prawn_86 (30 July 2009)

*Re: 20% above cash guaranteed. Would you invest?*

I can assure you this would be very popular, you know my stance TH. 

I would personally invest in a flash, providing the guarantee was solid. Compound 20% and i would reach my financial goals no worries.


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## skyQuake (30 July 2009)

*Re: 20% above cash guaranteed. Would you invest?*

Where do I sign?

I guess it would depend on the offerer's creditworthiness, whether I have claims over the issuer's property and chattels , how airtight the contract is, and what fees would be charged.

Most important would be how much I can put in. Doubt you can do that with 100mil under management TH


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## gooner (30 July 2009)

Trembling Hand said:


> Just purely as  hypothetical (nick off ASIC I'm not raising funds without a lic or prospectus)
> 
> If a hedge fund offered you 20% return above Australian cash rate annually would you invest in that fund? Even if they were making 60% returns or greater.
> 
> Would you feel cheated if you were only getting 30% of the profits? If your return was 20% but no more or no less.




Yes if it was guaranteed and the guarantor was someone like WBC.

But if it is just someone saying, "I aim to make 20% for you", and they are making 60%, then they are probably putting your money at high risk to get 60% and so would not invest.

Very Very few hedge funds make that sort of money. Mathews Capital did via heavy investing in oil futures and shares. But this is high risk - you get on the wrong side of the leveraged positions and capital disappears quickly


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## shiftyphil (30 July 2009)

If it was really guaranteed, then absolutely.


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## Trembling Hand (30 July 2009)

About the guarantee (hypothetical of course)

Obviously it wouldn't be a CBA & WBC doing it!!

It would go like this (hypothetical of course )

A long term profitable trader has extra cash sitting in a cash account. He chooses to put that up as security, say 40% of raised funds. So 20% to cover the return & 20% as a drawdown and drop dead level for the fund.

no further guarantee.


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## gooner (30 July 2009)

Slightly off topic, but might be of interest.

Capital guaranteed funds (say a five year one) work by taking your $10,000, investing $9,000 in a bank for five years at a fixed interest rate to give you your $10,000 back. They then invest the other $1,000 in various stuff like futures and equities to enhance the return. So if the fees are 2% pa, you are really paying most of that 2% to invest in cash. Dumbass.


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## Trembling Hand (30 July 2009)

gooner said:


> But if it is just someone saying, "I aim to make 20% for you", and they are making 60%, then they are probably putting your money at high risk to get 60% and so would not invest.




I guess thats why you are an Accountant. :


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## Trembling Hand (30 July 2009)

*Re: 20% above cash guaranteed. Would you invest?*



skyQuake said:


> Most important would be how much I can put in. Doubt you can do that with 100mil under management TH




No you would not be able to do it with that much. But say 2 - 5 mil. Don't want to be too greedy. Would need to leave some $$'s for the corp actions funds


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## awg (30 July 2009)

I would register my interest.

for an amount within my trade and risk management of course


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## skyQuake (30 July 2009)

*Re: 20% above cash guaranteed. Would you invest?*



Trembling Hand said:


> No you would not be able to do it with that much. But say 2 - 5 mil. Don't want to be too greedy. Would need to leave some $$'s for the corp actions funds




Will that mean we will see more spoofing on the HSI/SPI? 

fwiw, I think the free money from corporate actions is pretty much over though...


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## Naked shorts (30 July 2009)

Jim Simmons charges 5/44%, plenty of people invest in him.


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## Trembling Hand (30 July 2009)

Naked shorts said:


> Jim Simmons charges 5/44%, plenty of people invest in him.




Thats irrelevant. I could kick his teeth in with return as a % but wouldn't know what to do with any more than a few bob so that will lead us nowhere.


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## Mr J (30 July 2009)

TH, is this just curiosity or are you thinking of doing something?

I wouldn't take it (since I'm under the illusion I could beat 20%), but I imagine it would be very, very attractive to the majority.


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## Trembling Hand (30 July 2009)

It came up in a thread yesterday. Got me thinking.

I do have a fund setup - of sorts, with OPM. 

But due to Australians anti entrepreneur laws this is all just hypothetical of course. :brille:


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## Ashsaege (30 July 2009)

AFS should start up it's own hedge fund using the top traders on this forum


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## prawn_86 (30 July 2009)

Ashsaege said:


> AFS should start up it's own hedge fund using the top traders on this forum




Imagine the ego clashes


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## awg (30 July 2009)

Just asking

There are plenty of Investment "clubs" or "syndicates" about.

I was involved in a private property development syndicate, and that was set up just with a Solicitors agreement. 

made way more than 20%pa

That may neutralise some of the regulations about "financial advice"

I dont know, would be interested to learn more


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## Naked shorts (30 July 2009)

Trembling Hand said:


> Thats irrelevant. I could kick his teeth in with return as a % but wouldn't know what to do with any more than a few bob so that will lead us nowhere.




Well if investor capital builds to a point where it is harming your returns, just send it out to other high yielding managers. That's what most of the the big multi-strategy funds do (basically turn into FoF's).

p.s. I could guarantee 50%p.a. on your money, capacity $40mm (and that is with me taking 40% performance fee)


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## Trembling Hand (30 July 2009)

awg said:


> Just asking
> 
> There are plenty of Investment "clubs" or "syndicates" about.
> 
> ...




Yes all above board if you do not solicit for funds publicly and less than 20 investors and a whole heap of other stuff. As soon as it come out to the general punters then you run into a wall of legislation and compliance.


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## MACCA350 (30 July 2009)

Interesting proposal........er.....hypothetical 20% guaranteed above the cash rate would raise a lot of funds I'd imagine..........just don't skip town with it eh:

I'd probably throw some in.

cheers


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## mattlaw (30 July 2009)

I would definitely invest in that. Even if you only invested $20,000 for 20 years it would get close to a million.


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## Mr J (30 July 2009)

mattlaw said:


> I would definitely invest in that. Even if you only invested $20,000 for 20 years it would get close to a million.




Yes, but what's the million worth by that stage? 20% is 15% at most after inflation, though I suppose that is still attractive to most.

TH, what's the 'unofficial' fund type setup called? I have no idea what to google.


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## Krusty the Klown (30 July 2009)

TH, is this just a test to see how gullible so-called knowledgable financial types are to see if even they would fall for a Madoff type of offer!!! :

I suppose if the investor has certainty of what they are doing and know the history of the manager, it would be a different story.


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## sleepy (30 July 2009)

Trembling Hand said:


> Yes all above board if you do not solicit for funds publicly and less than 20 investors and a whole heap of other stuff. As soon as it come out to the general punters then you run into a wall of legislation and compliance.




Hi TH,

Id guess it depends on the final amount you were prepared to manage and how fast you planned on getting to that amount (i.e., work backwards). If is was a smaller amount you could probably get it from people you know ... which is how Buffett got started. In effect they would be investing in the person (i.e, you) rather than the strategy/approach.

Couple Questions ...
Why would you want to include general punters?
If you do ... are you prepared to do all the marketing/legistation required?
What happens when you get hit by a bus and cant trade for a period of time?

sleepy


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## Trembling Hand (30 July 2009)

Krusty the Klown said:


> TH, is this just a test to see how gullible so-called knowledgeable financial types are to see if even they would fall for a Madoff type of offer!!! :




Ha ha. just send money here,

http://maps.google.com.au/maps?f=q&...57,7.498802&spn=0.005086,0.00809&z=17&iwloc=C

But funny how the two accountants who have replied think.


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## Trembling Hand (30 July 2009)

sleepy said:


> Couple Questions ...
> Why would you want to include general punters?
> If you do ... are you prepared to do all the marketing/legistation required?
> What happens when you get hit by a bus and cant trade for a period of time?
> ...



 I wouldn't if thats what I was to do.

I was just interested in what people would think if they only got 30% or so of the profit, although that amount would still be handsome.


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## gooner (30 July 2009)

Trembling Hand said:


> I guess thats why you are an Accountant. :




As opposed to a disgruntled hedge fund investor

Average hedge fund returns here  http://www.melbournecentre.com.au/The Future Of Hedge Funds 2009_03.pdf

I personally have made 40% since the market lows earlier this year, although 30% of this was getting me back my losses. My investments were mainly blue chips (STO, WBC, ANZ, MQG, WPL, OSH etc) so reasonably low risk levels. However, I would be kidding myself if I though I could make that money consistently.

60% on a recurring basis is a huge target which very very few funds achieve. It usually requires taking commensurate risk. This is called the risk reward trade off

Of course if you are an exceptionally talented individual you may be one of the top echelon who could consistently make 60% running a hedge fund. It is possible, just not the norm


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## Krusty the Klown (30 July 2009)

Trembling Hand said:


> Ha ha. just send money here,
> 
> http://maps.google.com.au/maps?f=q&...57,7.498802&spn=0.005086,0.00809&z=17&iwloc=C
> 
> But funny how the two accountants who have replied think.




Hey that's my office!! How did you track me down!!


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## Krusty the Klown (30 July 2009)

Trembling Hand said:


> But funny how the two accountants who have replied think.




That's probably because accountants have a fundamentalist education where those sorts of returns are extremely rare, but not impossible by any means.

Accountants report on what happens in businesses, the returns you mentioned are rare in day to day businesses, so its a case of perspective.

The returns you mention could only come from an individual decision maker. If decisions were subject to committee approval, like a board or business partners, then mediocrity would prevail.

Individual traders getting that return, I don't see how that would be a problem at all, you only have to look at the concept of outliers. Cricketers like Warne and Bradman, Babe Ruth in baseball and Soros and Buffett in investment, the list is endless in every field.


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## Trembling Hand (30 July 2009)

gooner said:


> As opposed to a disgruntled hedge fund investor
> 
> Average hedge fund returns here  http://www.melbournecentre.com.au/The Future Of Hedge Funds 2009_03.pdf
> 
> ...




I'm not interested in the average return.

I'm not interested in how a hedge fund trades 50 mil.

Your example of trading STO, WBC, ANZ, MQG, WPL, OSH etc shows how completely unimaginative you are at this game. I have no interest in such methods or risk. 

Clueless


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## Mr J (30 July 2009)

gooner said:


> 60% on a recurring basis is a huge target which very very few funds achieve. It usually requires taking commensurate risk. This is called the risk reward trade off
> 
> Of course if you are an exceptionally talented individual you may be one of the top echelon who could consistently make 60% running a hedge fund. It is possible, just not the norm




1. No it doesn't require greater risk, just greater turnover. Shorterm traders generate such high returns due to much greater volume. TH would obviously be trading far more actively.

2. A hedge fund of what size? Yes, it matters. 60% on 100k is easier than on 1 mil, and that is easier than 10 mil, and that easier than 100 mil. TH is talking a few mil here, so far more maneuverable than the average hedge fund. 

3. How many hedge funds are actually good? 

If we assume TH would make a good mini-hedge fund manager, then that is who we would compare him to - to small, high volume, high performance funds. To compare him against the industry is just not reasonable.


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## trainspotter (30 July 2009)

Trembling Hand said:


> Just purely as  hypothetical (nick off ASIC I'm not raising funds without a lic or prospectus)
> 
> If a hedge fund offered you 20% return above Australian cash rate annually would you invest in that fund? Even if they were making 60% returns or greater.
> 
> Would you feel cheated if you were only getting 30% of the profits? If your return was 20% but no more or no less.




Hypothetically theorising then. No, I would not feel cheated if the fund makes greater than 20% return BUT I still obtained 20% from my initial investment as long as it is guaranteed ROI with no loss of input. Easy money in my book. Could you advise what term would be required? Say if I put in 200k for one year? Is the money at call? Theoretically speaking of course. What is my security and what course of action do I have if you FAIL to give me back my money PLUS the 20%? LOLOLOL .. this could go on forever this one !!


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## Krusty the Klown (30 July 2009)

trainspotter said:


> Hypothetically theorising then. No, I would not feel cheated if the fund makes greater than 20% return BUT I still obtained 20% from my initial investment as long as it is guaranteed ROI with no loss of input. Easy money in my book. Could you advise what term would be required? Say if I put in 200k for one year? Is the money at call? Theoretically speaking of course. What is my security and what course of action do I have if you FAIL to give me back my money PLUS the 20%? LOLOLOL .. this could go on forever this one !!




When you look at this proposal, it is no different from a bank's proposal.

Deposit your cash with XYZ Bank, we will give you X% return, we will take the cash and get our own return on it, then give you your X% return and principle back and keep the profit.

If you are confident with the management and the methodology, then the only thing different is the numbers.


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## trainspotter (30 July 2009)

I see your point Krusty ... the banks I guess are regulated in some way or another and have been around for a little while now and pretty sure the Govt have a strict code of conduct on them. Like you say ... if it stacks up, WHY THE HELL NOT? I guess with all of these so called investment fund advisers etc (Lehman Brothers, Storm Financial Group etc) hitting the wall I am a bit sceptical. If my money was secured by first registered mortgage and the LVR was 60% then I would think differently. If it was so easy then why bother getting other peoples money if you are making 60% ?? Ok stupid question ... of course you are going to be creaming the 40% off the top. I get that. Likelihood of a hedge fund returning 60% .... Hmmmmmm not good. IMO


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## Mr J (30 July 2009)

> Likelihood of a hedge fund returning 60% .... Hmmmmmm not good. IMO




I've pointed out why a comparison with a typical hedge fund is meaningless.


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## trainspotter (30 July 2009)

Oooooopsss ... Excuse me Mr J. I will look further back into the topic.


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## trainspotter (30 July 2009)

Trembling Hand said:


> I wouldn't if thats what I was to do.
> 
> I was just interested in what people would think if they only got 30% or so of the profit, although that amount would still be handsome.




I'm in TH. If you are interested that is. I have nooooo problem making 20 to 30 per cent on a transaction.


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## Judd (30 July 2009)

Who would be bothered with a pissant 20%?

Many moons ago I followed the suggestion expressed at Post #26.

I now sail the world in my in my 120 ft yacht, surrounded by nubile young women in scanty bikinis (white is so fetching against a tanned body) while drinking Moet, or the occasional Woodstock, while listening to the serene sounds of Jeff Buckley playing live - and I mean live as in actually in front of me.


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## trainspotter (30 July 2009)

ROFL Juddy ... that's me you are describing. (except the part about the yacht, I am on a 120 metre SUPERYACHT) Me thinks TH has sprung a trap to see how greedy we really are.


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## gooner (30 July 2009)

Trembling Hand said:


> I'm not interested in the average return.
> 
> I'm not interested in how a hedge fund trades 50 mil.
> 
> ...




Unimaginative? Perhaps, but I like my risk reward trade off.  And that is what the game is about investing where you are comfortable.  I don't have to get up during the night to see how futures are tracking and no chance of a margin call on my house.

Boring even, but that's the way us accountants like it


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## Mr J (30 July 2009)

gooner said:


> Unimaginative? Perhaps, but I like my risk reward trade off.  And that is what the game is about investing where you are comfortable.  I don't have to get up during the night to see how futures are tracking and no chance of a margin call on my house.
> 
> Boring even, but that's the way us accountants like it




Why do you assume TH has to get up during the night to check futures? Or that he's running close to margin? These are certainly not necessary for a shorterm trader. I certainly wouldn't call what he does "investing", unless you're talking about the investment of time and effort into the business of trading.


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## basilio (30 July 2009)

Quick little bunnies arn't we !!.  Twenty % above bank interest* GUARANTEED * Well that should certainly bring in the punters.

There is no such thing as a guaranteed return. It might be claimed, it might be offered, it might even be written down. But in the end it depends on the honesty and capacity of the person you are dealing with. And in the broad history of separating punters from their readies there just arn't any wide boys who you could catch to return your investment if and when it went sour.

There is a simple logic to this. If the proposer had such a cast iron deal he could get the funds at a far cheaper rate from a myriad banking bodies. Trading in hedge funds is just sophisticated gambling . It is not by any stretch of the imagination a tangible investment.

On the other hand reams of investment advisors, superannuation companies, and so on have made a fortune themselves with pitches along the above lines.


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## Trembling Hand (30 July 2009)

gooner said:


> Unimaginative? Perhaps, but I like my risk reward trade off.  And that is what the game is about investing where you are comfortable.  I don't have to get up during the night to see how futures are tracking and no chance of a margin call on my house.
> 
> Boring even, but that's the way us accountants like it




LOL. For an accountant you have NO idea of risk reward. NONE. I go to sleep 100% in cash. Your point that your good trading results the last months have only just got you back to zero shows you are clueless to risk and reward.

Boring!! low risk!! Oh really?? 


gooner said:


> I personally have made 40% since the market lows earlier this year, although 30% of this was getting me back my losses. My investments were mainly blue chips (STO, WBC, ANZ, MQG, WPL, OSH etc) so reasonably low risk levels.



See your lack of understanding about R:R?? You are running risk at 1:1.25 reward. Recipe for disaster and you call that boring??

You have no idea about risk. What a joke.


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## Trembling Hand (30 July 2009)

basilio said:


> Quick little bunnies arn't we !!.  Twenty % above bank interest* GUARANTEED * Well that should certainly bring in the punters.
> 
> There is no such thing as a guaranteed return. It might be claimed, it might be offered, it might even be written down. But in the end it depends on the honesty and capacity of the person you are dealing with. And in the broad history of separating punters from their readies there just arn't any wide boys who you could catch to return your investment if and when it went sour.
> 
> ...




basilio I actually find your attitude somewhat insulting. How about you bet against me. winner take all?


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## trainspotter (30 July 2009)

I am in two minds as to what to make of the goings on here TH. 

1) You have repeatedly instructed people that you only created this thread to see if the people are interested in being returned 20% even though theoretical hedge fund is obtaining 60% ROI. But you go on the front foot and tell people they have no idea of risk and are perpetuating a joke. AND they have a lack of understanding and they are clueless.

2) You say you feel insulted but you are the one doing the challenging.

Why don't you just lay your theory bare about going to sleep in 100% CASH with NIL risk with a ROI of 60% for all to see and we can mull it over?


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## Trembling Hand (30 July 2009)

trainspotter said:


> I am in two minds as to what to make of the goings on here TH.
> 
> 1) You have repeatedly instructed people that you only created this thread to see if the people are interested in being returned 20% even though theoretical hedge fund is obtaining 60% ROI. But you go on the front foot and tell people they have no idea of risk and are perpetuating a joke. AND they have a lack of understanding and they are clueless.
> 
> ...




Already have bud,

https://www.aussiestockforums.com/forums/showthread.php?t=12683

and here from page 2,

https://www.aussiestockforums.com/forums/showthread.php?t=10405&highlight=weekly+income


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## awg (30 July 2009)

Maybe TH wishes to speak for himself,

but for newer members, this thread was very popular and interesting at the time.

I think it gives some insight into what TH does

and partially addresses the questions you raise.

https://www.aussiestockforums.com/forums/showthread.php?t=12683

hey..he has spoken


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## johnnyg (30 July 2009)

T/H I've often seen you comment on reasons why capable traders would go and trade for trading company's. Alot bigger size to swing and if you can strike up a good deal with them a good return on the $$$ your trading with.

Isn't this what you'd be essentially be doing within 'your' hedge fund? If there is to much red tape to go threw surely trading for a firm would be much much easier assuming you could strike up a good deal with them

Or is it more a challenge for yourself to see if it can work? (along with bragging rights of course, I mean, who wouldn't love to have their own hedge fund)


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## trainspotter (30 July 2009)

Fantastic reading TH. Thanks for the info. You say that the trades displayed are a small percentage of your trading capital. May I be so bold as to inquire as to what $ value you are trading on any given day? I just noticed that to have 79 trades to make $240 is not really my cup of vodka. Understanding that you are trading with more capital but how do you decide as how much you place on each dealing? Or am I totally misunderstanding your principles here?


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## Trembling Hand (30 July 2009)

johnnyg said:


> T/H I've often seen you comment on reasons why capable traders should go and trade for trading company's. Bigger size and if you can strike up a good deal with them a good return on the $$$ your trading with.
> 
> Isn't this what you'd be essentially be doing within 'your' hedge fund? If there is to much red tape to go threw surely trading for a firm would be much much easier assuming you could strike up a good deal with them



Xactly,

Johnny it always surprises me for an investing forum the complete lack of Entrepreneurial spirit and thought of some.



johnnyg said:


> Or is it more a challenge for yourself to see if it can work? (along with bragging rights of course, I mean, who wouldn't love to have their own hedge fund)



 Xactly. I've worked for a wage/the man for about 3 years of my entire life. Its a stat I would prefer not to add to


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## awg (30 July 2009)

trainspotter said:


> Fantastic reading TH. Thanks for the info. You say that the trades displayed are a small percentage of your trading capital. May I be so bold as to inquire as to what $ value you are trading on any given day? I just noticed that to have 79 trades to make $240 is not really my cup of vodka. Understanding that you are trading with more capital but how do you decide as how much you place on each dealing? Or am I totally misunderstanding your principles here?





I never thought anyone could get through that thread so quick?


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## trainspotter (30 July 2009)

awg said:


> I never thought anyone could get through that thread so quick?




I am a real fast learner and an even faster reader.


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## gooner (30 July 2009)

Trembling Hand said:


> LOL. For an accountant you have NO idea of risk reward. NONE. I go to sleep 100% in cash. Your point that your good trading results the last months have only just got you back to zero shows you are clueless to risk and reward.
> 
> Boring!! low risk!! Oh really??
> 
> ...




ROFLMAO

Thought I might of learnt something from all those years on the market risk committee of one of the major banks.

However, I shall defer to your obviously superior knowledge


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## trainspotter (30 July 2009)

My favourite response was this one from Peter2

_Well done TH. 
An excellent example of cutting your losers asap. 
Your ave loss of 2.045 pts is incredible with a 2 point spread.

You have developed a rare and valuable skill. 
I think you should remind readers that you worked damn hard for a long time and must have had a lot of losing days getting your mind around this game._

I concur with the above statement wholeheartedly. Balls of steel. All glory to you TH . Quite remarkable in your approach to the "game". I can understand why you would have got 100's of PM's from newbies requesting you take $800 off them and turn it into $14,333 in a days trading. I dips me lid to ya I do.


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## Trembling Hand (30 July 2009)

trainspotter said:


> Fantastic reading TH. Thanks for the info. You say that the trades displayed are a small percentage of your trading capital. May I be so bold as to inquire as to what $ value you are trading on any given day? I just noticed that to have 79 trades to make $240 is not really my cup of vodka. Understanding that you are trading with more capital but how do you decide as how much you place on each dealing? Or am I totally misunderstanding your principles here?




I have a max amount risked per day. Amount risked each trade is relatively minuscule. Most traders risk about 1-2 % on each trade. I will not risk that much per day in total.

As per the dollar value ......  depending on the market & trade 1 to 10 contracts @ $8 to $25 per tick per contract. you go figure 

Like I say risk very controlled. Add in positive expectancy and almost infinite repetition and Risk to Reward is outside anything an "investor" could dream of. But goorner is telling me I don't know what I'm talking about. 

One of us dosn't I guess.


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## Trembling Hand (30 July 2009)

gooner said:


> ROFLMAO
> 
> Thought I might of learnt something from all those years on the market risk committee of one of the major banks.
> 
> However, I shall defer to your obviously superior knowledge




Gooner and where did that get you? a 30% drawdown! a wasted rally to get you back to square and no job.

I rest my case.


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## trainspotter (30 July 2009)

Thanks for the insight TH. A brilliant mind indeed! I would take $25 tick per contract on a 400 ticks in a blink rise (as per website) any day. Like the philosophy you preach "For a forum on stocks there are hardly any entreprenuerial apparoaches" rings quite true suddenly for me. Nice work. Now that you have shared there is no need to rub it in.


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## Mr J (30 July 2009)

trainspotter said:


> I just noticed that to have 79 trades to make $240 is not really my cup of vodka. Understanding that you are trading with more capital




$240 on a cfd. Instead, think about in terms of points for an index future. I seem to remember ~60-70 points, so multiply that by $25 per point per contract.



> Thought I might of learnt something from all those years on the market risk committee of one of the major banks.
> 
> However, I shall defer to your obviously superior knowledge




And what did you learn? TH is seems far more aware of risk when it comes to trade, especially since you assuming that this offer could only be accomplished by risky trading. Every time I see the suggestion that a greater return requires greater risk, I laugh. Maybe you don't realise TH is a shorterm trader, or maybe you just don't realise that comparing the returns of a trader to an investor is liking comparing apples and orangles. It's just as silly to compare a typical hedge fund to a trading fund of a few mil.


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## tech/a (30 July 2009)

T/H

I dont understand.
$800-$14K.
Regularly I am lead to believe.
Friends Give $1000s to help them out when
down and out from your own trading account
cause your a great guy.

1-10 Contracts up to $250/tick
and youve been doing this for sometime.
Surely you have either many $100s of K cash
Diversified investments. Compounding capital base.
Can leverage your brains out as you have No or very little risk.

Why On earth do you need to trade massive size?
How many Millions is enough or indeed needed?

Cant see the point?


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## trainspotter (30 July 2009)

Was that some kind of Japanese Haiku response I did not understand tech/a ?


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## Trevor_S (30 July 2009)

Trembling Hand said:


> If a hedge fund offered you 20% return above Australian cash rate annually would you invest in that fund?




Nope.


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## So_Cynical (30 July 2009)

TH]If a hedge fund offered you 20% return above Australian cash rate annually would you invest in that fund?[/QUOTE]

[QUOTE=Trevor_S said:


> Nope.




I'm with Trev...No Thanks.

Sure lots would and that's why we have disasters like Storm, Madoff, Timbercorp,  and Aust Capitol reserve and a thousand others...and most of them didn't have to offer 20%.


----------



## Trembling Hand (30 July 2009)

tech/a said:


> T/H
> 
> I dont understand.
> $800-$14K.
> ...



I guess there's lots of reason. I've been in all sorts of niche businesses for some time. Looking back the biggest regret I have is not exploiting the edges when they were relatively unexploited. Prime example is the closing up of the SPI with bots.

Second reason how long would someone want to sit in a room isolated from human contact as a way of life. Involving others becomes more important after a point.

Thirdly and didn't want to out myself but linked to the last. What if our  hypothetical trader can see a huge opportunity to duplicate a method by bringing in other traders and and providing them with access to capital and in the process produce an ongoing business. One that frees them from a 1 to 1 business to 1 to many. Basic business sense.

But like I said a couple of post ago. 



> it always surprises me for an investing forum the complete lack of Entrepreneurial spirit and thought of some.




But tech why am I needing to explain this to you?


----------



## Julia (30 July 2009)

Trevor_S;468459/ said:
			
		

> > Originally Posted by Trembling Hand View Post
> > If a hedge fund offered you 20% return above Australian cash rate annually would you invest in that fund?
> 
> 
> ...


----------



## ROE (30 July 2009)

No

My view of the hedge fund is you take in lot of other people money
you leverage up as far as you can, you place so called control bets
that could deliver huge return, not impossible, all possible

while the return is good you milk very nice fee, and if it doesn't 
its someone else money you lose and you already rich from pocketing the fees  ..the tricks is in the fees not the return

Suppose you got 10M for your fund and you can deliver 20+ return.
you milk 5% of that 10M each year for  few years....you goes bust some year later....you already pocket a million plus for zero dollar down 
that to you is more than 20% a year return compared to the people who put in the cash.

say you put in 1 dollar initially, 4 years you milk a million buck of fees
that an annual rate of return 3000% a year compounded for 4 years for someone who run the fund... 1 dollar - 1 million.

Long term capital has a formula for selling options that they thought was flawless, they make good money for a few years  until the Russian default on their debts.


----------



## Judd (30 July 2009)

Go the Bell Curve.  Three Standard Deviations will accommodate 98% of probabilities but, sadly, the 1% event cannot be accommodated.

Ergo, I don't believe.


----------



## Trembling Hand (30 July 2009)

Julia said:


> Me neither.  I will never give any of my money to anyone else to manage.
> 
> No reflection on you personally, TH, but I can't believe how trusting people are.   You're offered a 'guaranteed return'.   What is your recourse if it doesn't happen?




Julia and others fair enough. I understand the reaction thats why I started the thread. But in such a hypothetical situation you dudes are missing many details. Maybe even unfairly putting the idea down without any understanding.

In such a set up the money would NEVER leave YOUR account in YOUR name. FULL STOP. 

Cash would be held in escrow to cover the guaranteed return. So its already there if the trading doesn't produce it. Like I said Guaranteed.

So would a draw down amount (20%) be held in escrow to cover losses in case of such.


----------



## trainspotter (30 July 2009)

https://www.aussiestockforums.com/for...ad.php?t=12683

and here from page 2,

https://www.aussiestockforums.com/for...=weekly+income

I think these need to be read first ... comment second. Opened my eyes up like this


----------



## Trembling Hand (30 July 2009)

ROE said:


> No
> 
> My view of the hedge fund is you take in lot of other people money
> you leverage up as far as you can, you place so called control bets
> ...




Good one ROE did you even read the opening post? Because you are off on a rant that has nothing to do with what I'm talking about.


----------



## brty (30 July 2009)

Hi TH,

This thread is moving so quickly! For myself the answer is a clear No, but if you had a product available I know of others that would drop in many tens of thousands on my recommendation. Like many others here I have clearly learnt much more about you than I know of most hedge fund managers.

As tech said, Why? go down this path? If company is needed then open up an internet cafe and work from there, it doesn't matter if it makes no money. Same for thousand other things.

How much is enough?? Do you have plans to spend vast amounts, do you want/have a need, to be in the next 'Market Wizards' book??

There are plenty of people on this forum who obviously need someone to look after their money for them, your 20% guaranteed will be a huge winner, but I hope you are prepared for the grief the punters will give you for every minor setback. 
I wish you well.

brty


----------



## nunthewiser (30 July 2009)

personally , id probably take a chance with the guy only on the basis of what ive seen here .

it would be of an amount i could afford to lose without stopping my progress in life 

i would need more info on him tho other than being a forum/trading wizz


----------



## jersey10 (31 July 2009)

nunthewiser said:


> personally , id probably take a chance with the guy only on the basis of what ive seen here .




Me too. I'd undertake his training program and trade for him as well.


----------



## Timmy (31 July 2009)

I think I got this offer straight

My money sits in an account in my name.
Capital guaranteed.
The return is guaranteed to be Aussie cash rate, with scope to go as high as 20%.

What do I have to do?
As far as I can see I sit on my ass watching TV and eating potato chips.  (OK, I know I don’t have to do this, but this is what I would do).

Sounds great, I’m in.

The question you have, TH, is how I am going to feel after I get my 20% and I find out you made a lot more than that, right?

If I am a rational economic agent I shouldn’t care, my capital is guaranteed and my return is phenomenal compared with cash.  People aren’t rational, though.  I would be happy.  Many people are driven by greed and jealousy, they wouldn’t be happy and would go off in search of a ‘fairer’ opportunity and give their money to sharks ready to exploit their greed and jealousy.


----------



## doctorj (31 July 2009)

Presuming we can agree a structure for the guarantee that gives me suitable comfort, where do I sign?


----------



## Mr J (31 July 2009)

ROE said:


> No
> 
> My view of the hedge fund is




That's the problem. You're taking the bad apples of an industry and applying it to every fund.



			
				jersey10 said:
			
		

> Me too. I'd undertake his training program and trade for him as well.




Oh, I'd put my hand up for that.

I have no problems with 20% guaranteed, as I know how unlikely it is for an edge with volume to not be able to achieve that with smaller amounts. Those that have a problem with the guarantee probably aren't shorterm traders, and probably don't realise how reasonable it is to achieve year in year out.


----------



## tech/a (31 July 2009)

> But tech why am I needing to explain this to you?




Has to be the offer of a Carton of Coopers when you cant get a drink in Melbourne.

Interesting exercise.
There are many who find themselves in the situation our hypothetical genius finds themselves.
Hedge Funds
Managed Funds
Bucket shops
Black Box methods
Grey Box methods.
Seminars
Training camps
Software.

There is a great deal of entrepreneurial business being offered in this industry.
get it right and You'll make far more than any trading will give you with less risk,and a better consistency.

But you cross a line from Trader and skills in trading to Business and Business skill. Amazing trader doesnt necessarily equate to amazing business operator.

My Daughters Boyfriend ---an excellent cabinet maker came to me all eager and wide eyed.
"Im going into my own business"
"Great what do yo know about it?"
"Everything I need to I've built most everything"
"Yeh but never a business".

Trading entrepeneurship is NO DIFFERENT.

The smart ones will realise that *Building relationships* is the key to building a strong business foundation.

Clearly Tech/a has NOTHING to sell now or in the future!!

By the way the using your own account method has been and is being done right now!
Not a duplicate of what your suggesting but a variant.


----------



## Sean K (31 July 2009)

Sounds like a good deal to me, but I've been doing better than 20% anually, so I'd be losing money. :

However, I do have some cash sitting around waiting for this mythical W5, so I could chip in a few bucks to see what happened. 

Smells like a nice Ponzi in the making. 

As long as it could eventually buy that barque trainspotter is floating about on after 5 years. Deal.


----------



## gooner (31 July 2009)

doctorj said:


> Presuming we can agree a structure for the guarantee that gives me suitable comfort, where do I sign?




Which is the crux of the matter. Your standard capital guaranteed product will have a guarantee from one of the majors, which carry a AA credit rating. So not actually guaranteed, but you have a AA level of confidence which is pretty good, as long as you are will to put aside the Standard and Poors debacles over recent  years.

TH is saying 20% guaranteed. I am not aware of any product that offers 20% guaranteed and has actually turned out to be genuine.  Of course, TH could put in $20 of his own money for each $100 an investor puts in and lock this up, but then what is the point of that. We all gain at TH's expense ..........

There again, give TH's penchant for flaming, I would not have a problem with that.


----------



## Ageo (31 July 2009)

TH as long as we meet for coffee and i know where to find you incase the deal went sour i would have no problem with 20%.


----------



## Ageo (31 July 2009)

gooner said:


> TH could put in $20 of his own money for each $100 an investor puts in and lock this up, but then what is the point of that. We all gain at TH's expense ..........




Think of it as TH putting down 20% deposit for an 80% loan, but the only difference is instead of putting up capital for security he just puts his ego on the line hehe.

P.S TH i love the confident arrogance in you (and thats not meant to be insulting).


----------



## gooner (31 July 2009)

Ageo said:


> TH as long as we meet for coffee and i know where to find you incase the deal went sour i would have no problem with 20%.




Ageo

Or should I call you Mick Gatto?


----------



## Mr J (31 July 2009)

> TH is saying 20% guaranteed. I am not aware of any product that offers 20% guaranteed and has actually turned out to be genuine.




And how many of these products are offered by very small, high volume, high performance funds? None I assume. If we are to assume TH is a great trader as the forum consensus suggests (and he certainly appears very good to me), then performance is simply not an issue. 

The issue is trust - whether TH will skip with the money, or whether he might crack and go bust making silly trades. The first is pretty unlikely I would imagine, since he should be able to make far more from than deal than he would running off with the cash. The second, who knows. TH seems like he would be quite stable, but he wouldn't be the first trader to lose the plot :.


----------



## Krusty the Klown (31 July 2009)

The issue tech/a mentioned is valid, running a business is usually a drag on individual performance, which could hamper results, but if TH gets other traders on board, then that should alleviate that issue.

The point about relationships is key, people constantly distracting you, questioning every little thing, whinging, having a crisis, staff don't turn up, come to work drunk or hungover, had a fight with the other half, the dog is sick, the kid is sick, are they stealing, the car broke down, employee X called employee Y a moron and they can't work together.......

Getting the numbers in the black is usually the easy part, managing the people is the headache inducer.


----------



## Trembling Hand (31 July 2009)

tech/a said:


> Has to be the offer of a Carton of Coopers when you cant get a drink in Melbourne.
> 
> Interesting exercise.
> There are many who find themselves in the situation our hypothetical genius finds themselves.
> ...



 Yes tech I agree a good tradesman is not normally the best owner of a biz. But if I did do this it would actually be the first time I have started a biz out of the 10 or so I have started that I was first a good tradie. I'm not new to running/growing such endeavors. 



brty said:


> As tech said, Why? go down this path? If company is needed then open up an internet cafe and work from there, it doesn't matter if it makes no money. Same for thousand other things.
> 
> How much is enough?? Do you have plans to spend vast amounts, do you want/have a need, to be in the next 'Market Wizards' book??



 Ha ha. No brty I'm not wanting to be the next wiz. I will not be the next wiz . But I have come to this idea in a way from dismissing the idea of buying back into a biz. If I have to be around to mop the floors of a biz because the cleaners wife has ran off with the book keepers husband I better be there because I want to be there. Not because its a nice idea.


gooner said:


> TH is saying 20% guaranteed. I am not aware of any product that offers 20% guaranteed and has actually turned out to be genuine.  Of course, TH could put in $20 of his own money for each $100 an investor puts in and lock this up, but then what is the point of that. We all gain at TH's expense ..........



 No get one of your tricky spread sheet thingo's out and look what I have to put up AFTER the first year, assuming I make profit. 



Krusty the Klown said:


> The issue tech/a mentioned is valid, running a business is usually a drag on individual performance, which could hamper results, but if TH gets other traders on board, then that should alleviate that issue.
> 
> The point about relationships is key, people constantly distracting you, questioning every little thing, whinging, having a crisis, staff don't turn up, come to work drunk or hungover, had a fight with the other half, the dog is sick, the kid is sick, are they stealing, the car broke down, employee X called employee Y a moron and they can't work together.......
> 
> Getting the numbers in the black is usually the easy part, managing the people is the headache inducer.




Yep I know exactly what ya on about. Oh the head aches, I think I feel one coming now.


----------



## gooner (31 July 2009)

Trembling Hand said:


> No get one of your tricky spread sheet thingo's out and look what I have to put up AFTER the first year, assuming I make profit.
> (




"assuming I make a profit"  There you go, never assume anything.  If the guarantee is based on this assumption, it is not exactly a AA rated guarantee.


----------



## Trembling Hand (31 July 2009)

gooner said:


> "assuming I make a profit"  There you go, never assume anything.  If the guarantee is based on this assumption, it is not exactly a AA rated guarantee.






Gooner at the start of each year/period the money is already held in a bond of some sort to cover the guarantee. IF I don't make it the "investor" gets paid from the bond money. I close down. every laughs at me. life goes on.

What bit about that is not a guarantee??

After we get over this then tell me what my second year looks like?


----------



## gooner (31 July 2009)

Trembling Hand said:


> Gooner at the start of each year/period the money is already held in a bond of some sort to cover the guarantee. IF I don't make it the "investor" gets paid from the bond money. I close down. every laughs at me. life goes on.
> 
> What bit about that is not a guarantee??
> 
> After we get over this then tell me what my second year looks like?




You are guaranteeing 20% - what bond pays 20%? BNB perhaps?


----------



## mazzatelli (31 July 2009)

gooner said:


> You are guaranteeing 20% - what bond pays 20%? BNB perhaps?




I interpreted that as 20% kept in bonds, not invest in bonds that pay 20%


----------



## kincella (31 July 2009)

I am guessing it is drug money....I have no idea of the profits made from drugs, but guessing it must be substantial....
a commercial property can return 20%....and if one is to believe   the next armegeddon will be in commercial property, then you would be better off buying a good commercial property and holding it for many years....


----------



## Krusty the Klown (31 July 2009)

Trembling Hand said:


> Yep I know exactly what ya on about. Oh the head aches, I think I feel one coming now.




LOL, if you go ahead with the venture, make sure you keep that sense of humour!

You're gunna need it!!


----------



## Trembling Hand (31 July 2009)

gooner said:


> You are guaranteeing 20% - what bond pays 20%? BNB perhaps?




FFS!!  Are you serious??

Let me start ALL over again. 

The hypothetical situation is as follows,

The offer is a guaranteed 20% + AUD Australian Dollar LIBOR  (based on brokers overnight cash holding amounts) see here,

the LIBOR rate is in the bag as every account is in cash overnight and gets that. OK? cash rate taken care of.

The guarantee comes from MY funds put into escrow to cover the investor from two things. 1. I don't make over 20% from the investor funds. 2. I lose money and hit a 20% DD. Account closed investor gets my money. Simple investor win, I'm the fool.

The guarantee is for every $100 an investor puts in I lock away $40 in an escrow account satisfactorily to a bean counters wildest AA satisfaction under the best Ambulance Chasers 40 page contract protecting the investor.

First year for me I gain little. BUT please dudes what does it look like for me year 2 year 3 etc???? 

Compounding OPM.
Correctly capitalising a big biz.


----------



## stocksontheblock (31 July 2009)

Arent these 'to good to be true' investments called a Ponzi Scheme?


----------



## Sean K (31 July 2009)

mazzatelli said:


> I interpreted that as 20% kept in bonds, not invest in bonds that pay 20%



I love your new avatar. Please post that to Lima, care of kennas. Cheers.


----------



## stocksontheblock (31 July 2009)

Trembling Hand said:


> FFS!!  Are you serious??
> 
> Let me start ALL over again.
> 
> ...




Does/would this work irrespective of any market conditions?


----------



## Trembling Hand (31 July 2009)

stocksontheblock said:


> Does/would this work irrespective of any market conditions?




Who cares mate. She's just a big friggin Ponzi.

But just keep that between you and me


----------



## stocksontheblock (31 July 2009)

Trembling Hand said:


> Who cares mate. She's just a big friggin Ponzi.
> 
> But just keep that between you and me




Done, if I can be first in and first out then you have my money :


----------



## Krusty the Klown (31 July 2009)

Trembling Hand said:


> FFS!!  Are you serious??
> 
> Let me start ALL over again.






stocksontheblock said:


> Arent these 'to good to be true' investments called a Ponzi Scheme?






stocksontheblock said:


> Does/would this work irrespective of any market conditions?




How's that sense of humour going TH?


----------



## kincella (31 July 2009)

please show evidence of exactly how you can beat all the other investments out there....then secondly why would you want to share the profits...
if your scheme is so good...where is the proof....
and why would you be any different to say Bernie Maddoff...or Storm...or any of the others, who promised similar returns ...wink wink, nudge nudge
why dont you borrow the money and make your plus 20% returns....
oh and I can see ample evidence just on this thread, of how people would rush into these sorts of schemes....


----------



## Trembling Hand (31 July 2009)

Krusty the Klown said:


> How's that sense of humour going TH?




Krusty the funny thing is I'm not trading the last two days because I'm meant to be doing all my tax for the accountant to get by end of today. I'm off on a little holiday tomorrow.

But I've started this mess. Whats that thing about 1st things 1st and taking care of biz


----------



## Trembling Hand (31 July 2009)

kincella said:


> please show evidence of exactly how you can beat all the other investments out there....then secondly why would you want to share the profits...
> if your scheme is so good...where is the proof....
> and why would you be any different to say Bernie Maddoff...or Storm...or any of the others, who promised similar returns ...wink wink, nudge nudge
> why dont you borrow the money and make your plus 20% returns....
> oh and I can see ample evidence just on this thread, of how people would rush into these sorts of schemes....






back to square 1.............................. again


----------



## professor_frink (31 July 2009)

Trembling Hand said:


> Krusty the funny thing is I'm not trading the last two days because I'm meant to be doing all my tax for the accountant to get by end of today. I'm off on a little holiday tomorrow.
> 
> But I've started this mess. Whats that thing about 1st things 1st and taking care of biz




Some of the replies on this thread should be more than enough to put you off ever seriously thinking about managing OPM.


----------



## tech/a (31 July 2009)

T/H 

The replies in this thread should make it blatantly obvious why more have and dont do what your proposing.

The whole Idea initially is to escape the Crapp.

Go outside the Cone of silence and back to Crapp.
Business = Crapp.
Self Sufficient Dictatorship = Peace.

Oh did I mention the quick couple this morning.
An 85% increase on yeterdays profits.
Hmmm maybe 20 others could be enticed?


----------



## jonojpsg (31 July 2009)

I'm in TH - it's funny you have started this up though, I have thought in the time since I started on ASF that given the nature of this forum that someone would have done this before?  Maybe all the constraints you have mentioned are too big for most to bother trying to get around?

Anyway, are you aiming for some critical mass of positive resonses or do we just wait and hope 

BTW who cares if you're making and taking 60% of the profit - if you can get me 23%pa consistently I'll take it.


----------



## Mr J (31 July 2009)

stocksontheblock said:


> Arent these 'to good to be true' investments called a Ponzi Scheme?




Too good to be true? Maybe if it's available to the public, and I'm sure it won't be. Sharp money takes the good opportunities.



			
				kincella said:
			
		

> please show evidence of exactly how you can beat all the other investments out there....then secondly why would you want to share the profits...
> if your scheme is so good...where is the proof....
> and why would you be any different to say Bernie Maddoff...or Storm...or any of the others, who promised similar returns ...wink wink, nudge nudge
> why dont you borrow the money and make your plus 20% returns....
> oh and I can see ample evidence just on this thread, of how people would rush into these sorts of schemes....




1. The other investments? Like with Macquarie or something?
2. Share profits? No, he wants a larger capital base so he can achieve greater profits for himself.
3. If he's a good shorterm trader, I think that is proof enough.
4. Because he can trade.
5. TH?
6. Most people in this thread are skeptical at best.

Obvious stuff, why the questions?


----------



## Bushman (31 July 2009)

professor_frink said:


> Some of the replies on this thread should be more than enough to put you off ever seriously thinking about managing OPM.




Lol; if you are too emotive about every skeptic then you will be burnt out in no time. 

Money = security = primal instincts. As a business man, you should obviously know that investors will put you through the wringer and there is no such thing as a free lunch. 

Also the 20% range brings up some classic f**k ups from the last couple of years. Westpoint & Fincorp come readily to mind but I am sure the hedgies will have their examples too. Not dissing anyone's system - rather use it to demonstrate why other investors might be skeptical of a +20% return.


----------



## kincella (31 July 2009)

whatever...I am already making 22.9% on an investment, which I manage, and will do it again when I find another commercial prop....
cheers
and I would never trust anyone else with my money


----------



## overit (31 July 2009)

Sounds like you would be better off offering industry standard return and not telling others how much money you are really making from their money! Win-win as you get more money and people are strangely happier that you havent deviated from "conventional" parameters.

No good deed goes unpunished.


----------



## Trembling Hand (31 July 2009)

Now as this is a "hypothetical" and you would be asked to ignore the fact that my last name is Madoff the most important thing with any ponzi scheme is to get control of the cash away from your "clients" control and supervision. Correct??

Which by the by is not the structure my hypothetical idea would be based on. Maybe more on that later. 

But as I just commented to my wife, Ruth Madoff, it is disappointing though that for a stock forum full of supposedly hot blooded capitalist the best business discussion you can get is what account would the funds be held in. And why would I bother? 

So here is an idea. Lets say we have wrapped up water tight, to your satisfaction, the bond covering guarantee. OK?

I am gob smacked that no one has seen the leverage I would get for my initial "investment" after the first year. What kind of _exceptional wealth _(Tech )that would create compounded for 5 years for example, assuming (thats for you gooner ) that I can crack a system that has positive expectancy greater than 20% per year.

comments??


----------



## prawn_86 (31 July 2009)

Trembling Hand said:


> comments??




You would be effin rich. Even rich enough to fund your expensive lifestyle and put away money for the future generations of little trembling hands


----------



## Mr J (31 July 2009)

> I am gob smacked that no one has seen the leverage I would get for my initial "investment" after the first year.




Ehem:



			
				Mr J said:
			
		

> 2. Share profits? No, he wants a larger capital base so he can achieve greater profits for himself.


----------



## Ageo (31 July 2009)

So when we gonna catch up for that coffee TH :


----------



## Bushman (31 July 2009)

Ok I needed to do the sums. 

Ok, hypothetically, you have $1m sitting in a cash account. 

You want to guarantee LIBOR + 20% with the 20% backed by your cash account. So you can accomodate 5 'sophisticated investors' at $1m each. $5m is invested in the overnight market earning the cash rate. 

You take your $5m and, through superior trading skills, earn a p.a. return of 60% on your $5m ($3m), $1m of which must be paid to your five investors. 

So now your capital account grows by $2m, meaning that you can raise a further $10m from punters. 

Ad infinitum. 

Your trading skills presumable allow you to leverage up against your capital and, given you are a nefarious hedge fund raising money under an IM, you are able to seriously leverage up your positions in the short-term, allowing you to make your 60%. From my laymans grasp of your trading style, you are 100% cash overnight? 

Is this the plan? I can see how this would pay-off in FUM terms if you make it through the first year and presuming you can, indeed, beat your guaranteed return. It is a 'velocity of money' type scheme.  

How would you handle redemptions i.e. a run on the fund?  

Edit: actually, given you close out your intra-day positions, no need to worry about a run on given your short-term trading objective. So you will be 100% cash and be able to exit the scheme after paying out your 20% guarantee at any time. Also you will profit if you do not re-invest 100% of your profits into your capital account and take investor funds against that capital. So it really comes down to your trading and money management skill and making sure you don't blow a hole in the account through a leveraged position moving against you.


----------



## Trembling Hand (31 July 2009)

Bushman said:


> Edit: actually, given you close out your intra-day positions, no need to worry about a run on given your short-term trading objective. So you will be 100% cash and be able to exit the scheme after paying out your 20% guarantee at any time. Also you will profit if you do not re-invest 100% of your profits into your capital account and take investor funds against that capital. So it really comes down to your trading and money management skill and making sure you don't blow a hole in the account through a leveraged position moving against you.




Now we are getting somewhere, hypothetically of course.

So If we can lock away the guarantee problem of merely an administrative problem ie something for lawyers & bean counters to figure out. And we can even set up accounts so the money stays in the investors accounts Name such as this to alleviate the ponzi scheme problem.







The question becomes one of can a day trader or group of day traders trade size and make over 20% per year without a significant drawdown?


----------



## MACCA350 (31 July 2009)

kincella said:


> whatever...I am already making 22.9% on an investment, which I manage, and will do it again when I find another commercial prop....
> cheers
> and I would never trust anyone else with my money



70% return on investment after 9 months through shares(after costs), I want to crack 100% by 12 months

cheers


----------



## gfresh (31 July 2009)

These may be stupid questions, however:

1/ As far as I can gather your method of trading works on exploiting inefficiencies in the bid and ask que on the futures every few seconds... surely as you are trying to provide greater dollar returns to get your 20% y/oy you have to trade more and more money around these areas, in the end say millions of dollars at a time, therefore providing the liquidity, the lack of which you are exploiting? 

2/ Assuming you are eventually recruiting more and more trading cohorts as your capital base grows, don't you run the risk that you are effectively trading against yourself in the bid/ask if they are all running a similar trading method?


----------



## Cartman (31 July 2009)

Trembling Hand said:


> Now we are getting somewhere, hypothetically of course.
> 
> So If we can lock away the guarantee problem of merely an administrative problem ie something for lawyers & bean counters to figure out. And we can even set up accounts so the money stays in the investors accounts Name such as this to alleviate the ponzi scheme problem.
> 
> ...





Interesting stuff TH ---- not too many traders would back themselves to perform at those levels guaranteed --- with their own doe !!! 

For those that don’t realise --- you are taking *all* the risk in the proposed scenario --- the punters money is simply a means to an end for u to achieve the leverage u need to multiply your returns exponentially --- 

Couple of questions;

Hypothetically speaking  --- I assume u may have an imaginary start up capital base u would consider being suitable to get started with? --- ie too small, no real advantage --- too large, might (maybe not) create unnecessary performance anxiety early in the scenario??

I don’t doubt your ability and confidence for a second, but how would your psych handle the pressure of the extra size required to be traded to cover the punters investment guarantee -------- cause u r essentially using your money to create the trading profit ---- and -----

Once u prove your ability to the mass of punters (cause i know u would   -- and get a squillion more punters jumping on board, is there a point where the instruments u r trading become liable to under-performing  ie the size u need to trade becomes restrictive instead of productive  (not saying there is a ceiling on that, but do u have *a perceived area where the rate of decay sets in*   ---- ie no more punters allowed unless I drop the guaranteed rate of return)

Cheers ---- good thread.


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## Naked shorts (31 July 2009)

professor_frink said:


> Some of the replies on this thread should be more than enough to put you off ever seriously thinking about managing OPM.




+1
A fund manager once told me trying to raise funds was the worst thing they ever had to deal with, basically all investors are clueless.


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## MR. (31 July 2009)

Trembling Hand said:


> The question becomes one of can a day trader or group of day traders trade size and make over 20% per year without a significant drawdown?






Cartman said:


> Once u prove your ability to the mass of punters (cause i know u would   -- and get a squillion more punters jumping on board, is there a point where the instruments u r trading become liable to under-performing  ie the size u need to trade becomes restrictive instead of productive  (not saying there is a ceiling on that, but do u have *a perceived area where the rate of decay sets in*   ---- ie no more punters allowed unless I drop the guaranteed rate of return)
> 
> Cheers ---- good thread.




At a guess wonder in Madoff began in a similar way but couldn't continue to show the same returns. So he made them up! I bet even he wonders where he turned the corner. Get this straight, I'm not suggesting TH would think down that track but volume certainly is a barrier. And ofcoarse this is just a discussion.

Before Cartmans post I was thinking more about from point A (as you trade now) to B (a sizable increase on what you trade and what you are used to) 

Surely just from A-B would dent your current record without intoducing a C.


As for the original question off memory it matters not what your cut is, it is what you can show as a return for the investor.


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## Trembling Hand (31 July 2009)

Nah gfresh

Point 1/ not so.

Point 2/ the markets deep enough. Plenty so.


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## doctorj (31 July 2009)

Trembling Hand said:


> . I am gob smacked that no one has seen the leverage I would get for my initial "investment" after the first year. What kind of exceptional wealth (Tech )that would create compounded for 5 years for example, assuming (thats for you gooner ) that I can crack a system that has positive expectancy greater than 20% per year.
> 
> comments??



But who cares how much you make? In fact, I'd much prefer you make a decent clip - it would protect my interest in the scheme as well. To my mind, the risk of fraud would materially increase if your own return was materially less than your expectation.

The killer is, as always, the system. 20% for a decently sized account is no mean feat. Especially when you consider that a material drawdown just can't happen (I'm assuming investor's funds are available at a 1 day call) or the whole system is dead in the water.

So the question is, how would the scheme work?
1/ Independently reviewed evidence of making these returns over a meaningful period using this strategy
2/ Guarantee funds held in some sort of trust structure
3/ The development of some sort of mandate to dictate the way you trade (instrument, max risk, holding period)
4/ Regular, independently audited accounts & review of compliance to mandate
5/ The addition of some sort of independent governance etc etc
7/ Investors funds held in individual accounts per your diagram 
8/ Etc


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## basilio (31 July 2009)

Hasn't this discussion moved along 

My original point was that in the "real world" guaranteed 20% returns  were almost always a come in sucker sign. 

Anyhow I went back and read the original threads that trembling hand has started and perhaps there is something there in the system and TH's capacity to effectively play the game.

But I still suggest it is a big call to go from running a relatively small program with your own money to handling other punters money on a far bigger scale and over a longer time. Human nature and fluctuating markets are potent issues.

But I do like the seeming transparency of the hypothetical proposition. If one could have clear access to your own funds perhaps the punt could be worth it.

It does sound like a unique proposition.


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## Temjin (31 July 2009)

Trembling Hand said:


> FFS!!  Are you serious??
> 
> Let me start ALL over again.
> 
> ...




Hey TH,

Have been following this thread through but I would like to raise a few comments. 

Why would you choose this over the traditional managed future account model? That is, you managed each individual account on an advisory account in which you have complete control over all trading decisions. The client would have the ability to make deposit/withdraw/trading permission in his/her trading account depending on the original agreement with you. You would, as per normal hedge funds, charge 2/20 fee or whatever you feel appropriate. 

This is in essential the same as compounding other people's money as what you are doing.

Yes, your method is quite unique and unheard of. Your biggest risk would be your explicit guarantee of 20% return p.a. regardless of your trading result. You expect yourself to make more than that, but one should know that no strategies would ever work forever, and unexpected drawdown (and the length in which the account is in) has to be take into account. 

Look at it from another perspective, what you are doing is essential no different to establishing a loan for your trading account at an interest rate of 20% p.a. You then secure 20% of the borrowed money (or less after taking market rate interest into account) as a security to your "loan" and use the remaining 80% (or less) as your additional trading capital. 

However, I would agree that it would be extremely difficult to sell such a proposition to the general public especially when most people would be extremely wary of the "guaranteed" return of loan. In fact, I'm sure our local regulatory bodies would spend so much of their time "hassling" you so (despite of your good will/intention) that it may not worth the effort. 

In fact, your "fee" is quite expensive if you have the confident to generate higher than 20% (let say 40%) per year on your trading account, you are effectively charging a 50% performance fee to your clients. And if you generated 60% return, it's 66.6% performance fee. 

There are certainly quite a number of managed funds out there that would generate these sort of returns and with less fee, especially when you take advantage of their notional funding if provided. (i.e. minimum opening account is $100k, but notional minimum is $50k, or even $25k, effectively give you 200% or 400% leverage on his/her trading results)

Anyway, at least you have something unique in mind. Good luck with it. 

Cheers,

Temjin


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## Cartman (31 July 2009)

Temjin said:


> Hey TH,
> 
> 
> *In fact, your "fee" is quite expensive* if you have the confident to generate higher than 20% (let say 40%) per year on your trading account, you are effectively charging a 50% performance fee to your clients. And if you generated 60% return, it's 66.6% performance fee.
> ...





could be wrong here Tem, but i'm assuming TH's plan doesnt even touch the punters original capital ---- so there is in fact no fees as such ---- in a normal managed fund situation, what happens if the main honcho stuffs up and loses half of the companies capital base --- all the little punters get burned !! ---- TH may correct me if wrong, but in his scenario i am assuming he is putting his own cash on the line to make the profits, but just using the punters cash as a means to gain the necessary leverage ... 

that would represent a fund manager with both ballz and credibility ..... nah thats impossible


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## sjx (31 July 2009)

I would most definitely invest if it was guaranteed.


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## gooner (31 July 2009)

Cartman said:


> could be wrong here Tem, but i'm assuming TH's plan doesnt even touch the punters original capital ---- so there is in fact no fees as such ---- in a normal managed fund situation, what happens if the main honcho stuffs up and loses half of the companies capital base --- all the little punters get burned !! ---- TH may correct me if wrong, but in his scenario i am assuming he is putting his own cash on the line to make the profits, but just using the punters cash as a means to gain the necessary leverage ...
> 
> that would represent a fund manager with both ballz and credibility ..... nah thats impossible




Cartman

If you think that you can use customer's money as "leverage" without putting it at risk, then you belong on South Park


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## skyQuake (31 July 2009)

gooner said:


> Cartman
> 
> If you think that you can use customer's money as "leverage" without putting it at risk, then you belong on South Park




But its guaranteed isn't it? When up to 20% is lost the fund swallows itself and you get ur 80% back + 20% set aside.


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## gooner (1 August 2009)

skyQuake said:


> But its guaranteed isn't it? When up to 20% is lost the fund swallows itself and you get ur 80% back + 20% set aside.




That is 100% back or initial investment. That is not 20% returns guaranteed which should mean you get 120% back (this was the initial proposal).

If my $100 is in a separate account, then how can it be used for leverage? If it is being put up as security, then it is at risk and is thus not guaranteed. If it is locked off in a separate account can can not be touched or used as security, how can this therefore be used to provide leverage?


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## trainspotter (1 August 2009)

I have my prayer mat positioned to where you live TH. You are the true master.I am a mere disciple. Read the links below to see how it is bearing fruit.


https://www.aussiestockforums.com/for...ad.php?t=12683

and here from page 2,

https://www.aussiestockforums.com/for...=weekly+income

I think these need to be read first ... comment second. Opened my eyes up like this


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## Mr J (1 August 2009)

TH, I think you'd create less controversy by offering a 50/50 split and presenting a bit of a track record. My plan, providing trading works out.


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## trainspotter (1 August 2009)

Would I place money into an account that is cash based with my name on it with an interest rate at 20%? SHEEEEEEEEEEEEEET YEAH I WOULD. Trade your @rse off Trembling Hand. Give me my 20% any day ! 

(for those who do not know what TH does you sould read more first and ask questions later) IMO


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## Trembling Hand (1 August 2009)

doctorj said:


> But who cares how much you make? In fact, I'd much prefer you make a decent clip - it would protect my interest in the scheme as well. To my mind, the risk of fraud would materially increase if your own return was materially less than your expectation.



 Yes I like that way of thinking about it. You don't get nothin' for nothin'. You could even see it happening like this,

each 1/4 I put up 20% in escrow for DD protection. And 5% of funds from my own money to the Client (locked away) and I get to margin the client funds.

end of period client get to keep my 5% and doesn't even know how much I made margining his funds . Sounds a bit sinister but that could work. 


doctorj said:


> The killer is, as always, the system. 20% for a decently sized account is no mean feat. Especially when you consider that a material drawdown just can't happen (I'm assuming investor's funds are available at a 1 day call) or the whole system is dead in the water.



 Yes many will roll their eyes but a DD as always is on the cards, But a large and more importantly quick one if not likely. Using normal MM of 0.5 to 1 % at risk per DAY not per trade things move alone in either direction smoothly. (watch the them bring up the "ya but what if a plane flies into the ...")



doctorj said:


> So the question is, how would the scheme work?
> 1/ Independently reviewed evidence of making these returns over a meaningful period using this strategy
> 2/ Guarantee funds held in some sort of trust structure
> 3/ The development of some sort of mandate to dictate the way you trade (instrument, max risk, holding period)
> ...



 Some good points here.

1. yep
2. Absolutely
3. Absolutely
4. yep
5. I guess that getting beyond the capability at a theoretical start up.
6. where is it? or is that fine print I see 
7. I really think thats a very important one. To enable a so called "client" to log in daily if they feel like it and see real time progress - or lack of it. Logistically it already possible.


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## Trembling Hand (1 August 2009)

Temjin said:


> Why would you choose this over the traditional managed future account model?



 Why? I have no interest in 2/20. For lots of reasons. One of them being that you would be just another fish in the sea of tossers looking to ride the 2/20 gravy train. Have had enough experience in other types of biz to know the quickest way to slavery and failure is to try and copy whats been done before.



Temjin said:


> Look at it from another perspective, what you are doing is essential no different to establishing a loan for your trading account at an interest rate of 20% p.a. You then secure 20% of the borrowed money (or less after taking market rate interest into account) as a security to your "loan" and use the remaining 80% (or less) as your additional trading capital.



 Yes thats exactly right, for the FIRST year. After that the equation swings greatly in my favour. Its like leverage & compounding & OPM super charged yet risk to me 20% of initial funds And without exposing my "clients" to risk thats not covered.



Temjin said:


> However, I would agree that it would be extremely difficult to sell such a proposition to the general public especially when most people would be extremely wary of the "guaranteed" return of loan. In fact, I'm sure our local regulatory bodies would spend so much of their time "hassling" you so (despite of your good will/intention) that it may not worth the effort.



I would never bother selling this to the public. remember this is just a hypothetical.



Temjin said:


> In fact, your "fee" is quite expensive if you have the confident to generate higher than 20% (let say 40%) per year on your trading account, you are effectively charging a 50% performance fee to your clients. And if you generated 60% return, it's 66.6% performance fee.
> 
> There are certainly quite a number of managed funds out there that would generate these sort of returns and with less fee, especially when you take advantage of their notional funding if provided. (i.e. minimum opening account is $100k, but notional minimum is $50k, or even $25k, effectively give you 200% or 400% leverage on his/her trading results)
> 
> Anyway, at least you have something unique in mind. Good luck with it.



 Yes it is expensive when you compare it to the 2/20 crowd. But they will also exposure to the 2/-20 return. I think a guaranteed 20% separates this from any comparison. IMO.


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## Trembling Hand (1 August 2009)

Cartman said:


> could be wrong here Tem, but i'm assuming TH's plan doesnt even touch the punters original capital ---- so there is in fact no fees as such ---- in a normal managed fund situation, what happens if the main honcho stuffs up and loses half of the companies capital base --- all the little punters get burned !! ---- TH may correct me if wrong, but in his scenario i am assuming he is putting his own cash on the line to make the profits, but just using the punters cash as a means to gain the necessary leverage ...
> 
> that would represent a fund manager with both ballz and credibility ..... nah thats impossible



 Nah Chartman gooners right ya got to 'use' the funds.

My cash is to protect against DD and or not hitting 20% or over.


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## Trembling Hand (1 August 2009)

gooner said:


> That is 100% back or initial investment. That is not 20% returns guaranteed which should mean you get 120% back (this was the initial proposal).
> 
> If my $100 is in a separate account, then how can it be used for leverage? If it is being put up as security, then it is at risk and is thus not guaranteed. If it is locked off in a separate account can can not be touched or used as security, how can this therefore be used to provide leverage?



For ever $100 raised I put up $40. $20 being the guarantee in trust(or whatever), and $20 being the DD protection for clients.


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## Trembling Hand (1 August 2009)

Mr J said:


> TH, I think you'd create less controversy by offering a 50/50 split and presenting a bit of a track record. My plan, providing trading works out.




But here is the kicker. I'm not thinking about running a fund. I'm thinking about eventually moving to something not so much bigger but same repeated X 100.

2/20 or even 50/50 simply doesn't work.


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## pursuitute (1 August 2009)

Trembling Hand, 

I've read through many of your threads/posts of the past few days and to say that your concepts have caught my interest is an understatement.  Be they your trading style, philosophy or this hypothetical venture.

I'm new to trading, so new that I've only made one trade, and I feel a little inept in understanding the terminology and consequently the method by which you achieve what you do. But more on that for the rest of my life I guess 

In this hypothetical:

I understand in typical terms that Persons (A), (B) & (C) give money [say $1m each) to Person (Z) and they hope for a return of some %.  Be it from building a block of flats, selling lollipops or investing in the market.  I also understand that normally, the money handed over could well all disappear.

If I have understood your plan, you want to see that money put into a nice safe spot where the investor still has access to it but you trade it at the same time?  You use the $3m to trade your heart out and if you get to a point of losing 20% on the initial capital, you stop the game, give each punter $800k + $200k from the $600k account you had set aside in the beginning - call it your start-up costs that you hope to never actually spend.

Presumably, when you raise $600k, you would set it aside knowing at that point in time, your promise to your investors will be fulfilled and from then on you make your own hay... lots of hay.

Assuming I'm on the right track with this, how would the brakes be applied to guarantee losses cease at 20%?  How would I be guaranteed that the $200k would arrive from you to top up my lost capital?  

With regard to how, as an investor, I would cope with someone making a killing whilst I get a relative pittence, I have no qualms with that at all - particulalry given that the risk level you are operating at is of no consequence to me.  My current business is one where my takings are about 1/20 of my partners but I am happy in that I dodge the hard and risky things they do and my 20th returns me around 80% margin.

I generate a large part of their work for them, they do what they do and they are obliged to buy through me in return.  For every $10m revenue I create for them, I get $200k.  Am I happy about that? Bloody oath.

I do wonder why though, you don't just borrow the money [or use your own] and do it yourself without having pesky partners crawling all over you?  

You're taking all the risk, why give up 20%?  Is it because it is easier to raise the capital this way or is it that you simply want to share the love?

It seems a great venture and one that I would be interested in however the kind of money that I can put aside would likely just be used for rounding anomallies.  I guess enough anomallies like me would work just as well though.

Anyway, seems like a no-brainer to me.  I'd be better off selling the houses, giving you the $ and renting a place.  I'd have a lot more disposable cash month to month and the returns would out-strip property by a landslide.

Sounds like a clever plan, nice thinking outside the box 

now.... back to my reading 

edit - took me a little while to get this out of my head and on to vapour so sorry if questions have been answered in the mean time.


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## Trembling Hand (1 August 2009)

Scott lots there lets see what I can cover.

Firstly the why not just remortgage the house or use surplus funds to increase my current size?

Ok say I can pull $500,000 lazy dollars from the long term portfolio & house etc. look at this.

5 years on @ 40% I've turned $500,000 into $2,689,120. NICE!

or

$500,000 used to raise $1,250,000, $1,250,000 @ 40%  = $6,722,800 Much NICER!!!!  But I have to give back 20% each year + capital which would be $3,986,400 leaving me $2,736,400. Worst off??  Yes but,

This is the crux of it. Every $40 I earn for myself I can add extra investors by an extra $100. It looks like using my profit to pull more investors, I would end up with $6,00,000 after five years. !! from $500,000 invested.

Now lots of assumption and what ifs doubts about trading size and does the investors take returns or compound etc etc. But if I moved to quarterly figures ie 5% per quarter guaranteed this baby really turns into a rocket. (hopefully not one of the N.Korea type )


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## trainspotter (1 August 2009)

Good thing this is ALL hypothetical. :iagree:


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## Trembling Hand (1 August 2009)

trainspotter said:


> Good thing this is ALL hypothetical. :iagree:




Why of course  :engel:



luckily I'm leaving the country in a few days.


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## pursuitute (1 August 2009)

Trembling Hand said:


> Ok say I can pull $500,000 lazy dollars from the long term portfolio & house etc. look at this.
> 
> 5 years on @ 40% I've turned $500,000 into $2,689,120. NICE!
> 
> ...



Thanks for the reply but I struggle with following your maths.

Can you please set me straight on the following:

You start investing with $1,250,000 on day one, by the end of Yr5, you have turned it into $6,722,800;
At the end of the Yr5, you return an amount of $1,250,000 that has compounded at 20%pa for 5 years - it is $3,110,400;
$6,722,800 - $3,110,400 = $3,612,400 in your pocket (not including the $500,000 that is now free again);

What have I missed that would make you have to return $3,986,400 instead of $3,110,400?


----------



## nathanblack (1 August 2009)

after the 1st year he puts aside HIS share of profits and uses it to tap into more investors on the same deal. gaining acess to more funds and earning profit upon profit, while maintaining the same gearing and same promise of 20% return.

CORRECTION: HE MEANS return of $3,986,400 to him (versus your calc of $3,612,400). not the mount he needs too payback the investor.

the discrepency is he returned 20% pa and didnt compund it. you reinvested that 20%(ie compounded).

NO: im just confused because i have no calculator lol


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## Cartman (1 August 2009)

pursuitute said:


> What have I missed that would make you have to return $3,986,400 instead of $3,110,400?




the wages for his new secretary cause of all the goddamn paperwork 

actually $3,110,400 looks correct ---- u just made an extra 800K TH


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## nathanblack (1 August 2009)

Cartman said:


> the wages for his new secretary cause of all the goddamn paperwork
> 
> actually $3,110,400 looks correct ---- u just made an extra 800K TH




For 800k i hope the secretary types extra fast or makes great coffee maybe she has great oral skills...to cumminicate over phone with satisfied investors.


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## pursuitute (1 August 2009)

Cartman said:


> actually $3,110,400 looks correct ---- u just made an extra 800K TH



I was thinking it might be something in the cash rate (which I have not factored).  

edit - though the cash rate would only cut on the investors share of the greater # and would only account for half that gap.... unless TH was returning it on the whole shebang.


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## nathanblack (1 August 2009)

pursuitute said:


> I was thinking it might be something in the cash rate (which I have not factored).
> 
> edit - though the cash rate would only cut on the investors share of the greater # and would only account for half that gap.... unless TH was returning it on the whole shebang.




i think the cash rate makes it even more profitable, because the money sits in an account earning 4% to offset the 20%.


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## MACCA350 (1 August 2009)

All these calculations has me wondering about how the interest would be calculated and paid.

TH I think you mentioned that the investors funds would be at call, is that correct? if so is that at call 24/7, or outside trading hours. 
Also how would the interest be calculated and paid? ie calculated daily and paid monthly like the usual saving acc since this would be an at call acc, so the interest would be compound on a monthly basis.

I think you also mentioned that the investors would have access to the trading account allowing them to close out trades, is that correct? Wouldn't that have an adverse effect on your profitability as the driver of this investment and cause you difficulty in meeting your profit goals and be a detriment to the overall success of the investment?

cheers


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## Trembling Hand (1 August 2009)

pursuitute said:


> What have I missed that would make you have to return $3,986,400 instead of $3,110,400?




Err now I have confuesd myself!! lol.

I need a bean counter.


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## Trembling Hand (1 August 2009)

Oh and of course the above doesn't take into account tax being paid. Which is a drag on performance.


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## MACCA350 (1 August 2009)

nathanblack said:


> i think the cash rate makes it even more profitable, because the money sits in an account earning 4% to offset the 20%.



TH is suggesting that the investors will earn 20% above the cash rate........which at the moment would be 23%. I think he mentioned the funds would be transferred to some other account overnight to cover the cash rate amount so all TH needs to worry about is the 20% for investors. 

So investors annual return would be 20% + variable cash rate(+ compounding depending on whether TH plans to pay the interest on a more regular basis than 1 year) 

cheers


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## pursuitute (1 August 2009)

Trembling Hand said:


> Err now I have confuesd myself!! lol.
> 
> I need a bean counter.



Bah, forget it.  I prefer your maths anyway


----------



## Trembling Hand (1 August 2009)

MACCA350 said:


> All these calculations has me wondering about how the interest would be calculated and paid.



 I'm thinking quarterly paid. That is I would return a flat 5% + LIBOR to the client to either reinvest or take as a div.So its not exactly daily compound, besides the LIBOR, but its better than annual compound.



MACCA350 said:


> TH I think you mentioned that the investors funds would be at call, is that correct? if so is that at call 24/7, or outside trading hours.



 You normally deal with these things in the agreement thingo. You have a lock up period I would propose quarterly. Also in that agreement a drop dead level where trading is stopped, game over, funds returned - 20%, guarantee gets payed out of the trust etc.



MACCA350 said:


> I think you also mentioned that the investors would have access to the trading account allowing them to close out trades, is that correct? Wouldn't that have an adverse effect on your profitability as the driver of this investment and cause you difficulty in meeting your profit goals and be a detriment to the overall success of the investment?



 No thats not correct. They have no trading permissions - obviously. But they do have at anytime the ability/authority to remove trading permissions. Call game over for what ever reason. Also real time monitoring.



MACCA350 said:


> TH is suggesting that the investors will earn 20% above the cash rate........which at the moment would be 23%. I think he mentioned the funds would be transferred to some other account overnight to cover the cash rate amount so all TH needs to worry about is the 20% for investors.



 No need to transfer to other account. AUD LIBOR is the standard rate for overnight funds of this account.


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## MACCA350 (1 August 2009)

Ok, so it's similar to a term deposit with the investor having the ability to close out their position at any time accepting any losses and forfeiting the interest.

I guess the shorter the term the more pressure on you to perform more consistently, and having an at call facility with calculated daily paid monthly interest setup would make things quite difficult for you to perform if you don't know exactly what your trading balance will be from day to day. Would that conclusion be accurate or is your strategy flexible enough to accommodate that kind of setup?

cheers


----------



## Trembling Hand (1 August 2009)

MACCA350 said:


> Ok, so it's similar to a term deposit with the investor having the ability to close out their position at any time accepting any losses and forfeiting the interest.



 No losses buddy . I would assume such detail would be worked out in the hypothetical offer agreement.


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## nunthewiser (1 August 2009)

u considered the tax implications upon your good self ? seeing as the actual trading being done via your name only


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## trainspotter (1 August 2009)

Post me the hypothetical Offer of Information Statement with the usual "sophisticated investor" clauses please.


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## MACCA350 (1 August 2009)

Trembling Hand said:


> No losses buddy . I would assume such detail would be worked out in the hypothetical offer agreement.



Sounds interesting, would you have a cap on total initial investment?

I guess it would depend on the amount you'd be willing to invest also given the guarantee+draw down of 40%, say you put up 400k investors would be capped at 1M initially.

Also do you have a response for the second question in my last post? is it possible?

cheers


----------



## Trembling Hand (1 August 2009)

MACCA350 said:


> I guess the shorter the term the more pressure on you to perform more consistently, and having an at call facility with calculated daily paid monthly interest setup would make things quite difficult for you to perform if you don't know exactly what your trading balance will be from day to day. Would that conclusion be accurate or is your strategy flexible enough to accommodate that kind of setup?



 If you want "a at call facility with calculated daily paid monthly interest setup" then they are readily available, paying 3% i believe. Its simply not the way any hedge funds are measured against. monthly performance would be really the minimum metric to judge on.



nunthewiser said:


> u considered the tax implications upon your good self ? seeing as the actual trading being done via your name only



 No it aint. Each punter pays tax on their P & L. The p & l just filters through the tree.



trainspotter said:


> Post me the hypothetical Offer of Information Statement with the usual "sophisticated investor" clauses please.




You trying to get me into trouble?


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## kincella (1 August 2009)

just wondering out loud, it appears your investment is only in cash and the stockmarket....
but look here, guaranteed 9% return for 20 years, then feel free to lease it to Lendlease again, or find another lessee, or sell the business...aged care units, a passive investment...returning $474,541 pa...so its for sale at $5,282,788....
and its backed by real estate....it certainly beats your 4% cash deposits
just need 5 investors at $1 mill a piece or 10 at half a mill 
or like one of my investments, picked up for just over 200 k's now worth about 2 million in 7 years, plus a lovely passive yearly income....
or you buy a business, old rule of thumb was you recovered your capital costs within 5 years,,,so if it was turning a profit at 200k's pa, it would cost 1 million...so theres 20% return.....
'there are heaps of ways of earning 20% pa, or stacks more...and less risk than just the stockmarket.....
maybe you should look for a bigger picture or horizens

http://www.realcommercial.com.au/cg...t=&header=&cc=&c=14849312&s=nsw&tm=1249100690


----------



## trainspotter (1 August 2009)

Hypothetically speaking. "NO" ... was just thinking out a bit too loud.


----------



## nunthewiser (1 August 2009)

Trembling Hand said:


> No it aint. Each punter pays tax on their P & L. The p & l just filters through the tree.
> 
> 
> 
> :




cool no worries , i did have a quick read but obviously missed how that part was going to be dealt with


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## Trembling Hand (1 August 2009)

:bonk:

Priceless contribution to the topic kincella. And I mean that in the most literal way.


----------



## MACCA350 (1 August 2009)

kincella said:


> just wondering out loud, it appears your investment is only in cash and the stockmarket....
> but look here, guaranteed 9% return for 20 years, then feel free to lease it to Lendlease again, or find another lessee, or sell the business...aged care units, a passive investment...returning $474,541 pa...so its for sale at $5,282,788....
> and its backed by real estate....it certainly beats your 4% cash deposits
> just need 5 investors at $1 mill a piece or 10 at half a mill
> ...



And none of those are truly guaranteed(granted they may be low risk), ie the real estate backing could topple over, the business could go bankrupt. The only thing that is truly guaranteed is the government backed banks savings acc at 4%(give or take)

The annual 20%+variable cash rate(and remember this compounds quarterly or possibly monthly) HT is proposing would be 100% guaranteed by his own cash in a bank account, ie he will take all the risk not the investors.

cheers


----------



## mazzatelli (1 August 2009)

TH would you consider to set this hypothetical structure offshore?
Cayman Islands, Bermuda, Luxembourg etc


----------



## pursuitute (1 August 2009)

kincella said:


> just wondering out loud....,
> 
> .....'there are heaps of ways of earning 20% pa, or stacks more...and less risk than just the stockmarket.....
> 
> maybe you should look for a bigger picture or horizens




The difference is that there is ~40% security being offered in this hypothetical deal which, if managed honestly, can guarantee the minimum 20%.  If the whole thing went pear shaped and suffered a 20% loss on day one, the game is over, half of the 40% is returned to you to recover your capital and the other half is paid to you to achieve your growth.

In a 'great' world, the hypothetical trader would fail miserably on day one and you'd make 20% whilst having a fat time laughing at the schmuck who just gave you his money.  In a perfect world, it would all go swimmingly and as his profits grew, you would sell the kids to keep pouring in for as long as you could.

Point me anywhere I can get a "guaranteed with cash" 20% return that I can close out of and run whenever I feel like it and I'll slap a sticker on the dog tomorrow.  She's 15yo but I reckon I could get 10c a kilo worst case 

No tennants, no repairs, no insurance, no management fees, no land tax no worries.  Sell the house, drop in $1m, kick back and relax on your hypothetical yacht.... don't forget to keep a very close eye on the current +/-.  This is the interweb afterall


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## kincella (1 August 2009)

with the 9% rental coming in....there are no outgoings...the tenant pays all outgoings in commercial property....rent increases with cpi, Lend Lease is an excellent operator, the aged care industry is one of the fastest growing markets...and you would probably double the capital growth in the first 10 years...or even triple it....
there is very little risk in this deal.....its just food for thought


----------



## MACCA350 (1 August 2009)

kincella said:


> with the 9% rental coming in....there are no outgoings...the tenant pays all outgoings in commercial property....rent increases with cpi, Lend Lease is an excellent operator, the aged care industry is one of the fastest growing markets...and you would probably double the capital growth in the first 10 years...or even triple it....
> there is very little risk in this deal.....its just food for thought



Difference being with TH's hypothetical(based on quarter) you would double your investment in just 3 years, tripple in 5 years......after 10 years you'd be up nearly 10 fold.

eg 1M investment +5%(TH interest)+1%(variable rate of 4%pa) paid each quarter.......after 10 years you'd have 9.7M(if I calculated that right)..........considering the standard variable rate will no doubt rise in that time, you'd be well over 10M, more if TH decides to run this hypothetical monthly instead of quarterly.

And remember TH's hypothetical is 100% guaranteed backed by CASH!!

..........hmmm 900% profit on investment after 10 years backed by cash, can't really sniff at that

cheers


----------



## prawn_86 (1 August 2009)

kincella said:


> 'there are heaps of ways of earning 20% pa, or stacks more...and less risk than just the stockmarket.....
> maybe you should look for a bigger picture or horizens




Kincella,

Believe it or not but this is a stock market forum, hence the stock market focus.
www.aussiepropertyforums.com is a property forum, hence the property forcus.
www.aussietravellersforum.com is a travel forum, hence the travel focus.
etc etc


----------



## Julia (1 August 2009)

I'm a little surprised at the number of people jumping up and down at the idea of a 23% p.a. return when the XAO has done around 30% since March.


----------



## skc (1 August 2009)

TH,

I think I fully understand your hypothetical scheme and I would be the first to put money in once I am satisfied that all the structure is in place. It's a no brainer. Your trading ability (or lack of) has nothing to do with my return if structured properly. 

However, I think there are a few changes to make it work better for you.

You are always putting up $40 of your own money to attract $100 of investors funds, in year 1 or all subsequent years. To me you are reinvesting all your profits, leveraging 2.5 times every year and paying 20% interest p.a. The result of this is that you double your money every year, assuming you make 60% on the $100 investor funds. Another way to think about this is, TH is putting 40% away as a margin (which cannot be risked), and clearing 40% (being 60% return from trade minus 20% paid out to investors), so TH doubles what he has.

*The key here is 2.5x leverage. *Is this not achievable through other less costly (i.e. <20% p.a.) means? In fact, you can achieve the exact same result for yourself with just 2x leverage if the cost is 10%. If you had $1m cash, can you not borrow another $1m at 10% p.a. while pledging your trading account balance as security, with a LVR of 60% as a convanent or something like that?

If you feel like starting a fund, what you might want to do is guarantee and pay out less than 20%. Quoting 20% makes people suspicious and is a drag on your own performance. Whereas a 10% payout in year 1, and then a 2% increase per year or something like that might be a better way to go.

The other key issue to me is how much $ can you trade on your own as a single individual who needs 4 hour+ sleep? $2m? $5m? Regardless, you will need to employ someone else to trade for you soon, may be as early as year 2 or 3. The issue then becomes whether they can generate 60% p.a. straight away, and what's stopping them from just running away to trade privately after learning your craft? Something to seriously think about if your idea is to become a meaningful ($10m+) scale. Otherwise you might as well just continue doing what you are doing and take a couple more years to get to the same place. You may have to let other traders in as partners (after hefty buy-ins) for your business to continue to grow.

Do send me details when your scheme moves from hypothetical to conceptual.

P.S. I am impressed with your scheme structure, but even more impressed at your patients in responding to the many repeated questions being raised here.


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## skc (1 August 2009)

Julia said:


> I'm a little surprised at the number of people jumping up and down at the idea of a 23% p.a. return when the XAO has done around 30% since March.




Guaranteed vs market return... quite different animals.

No matter how you look at it a 20% guaranteed return has a place in anyone's investment portfolio.


----------



## Mr J (2 August 2009)

Julia said:


> I'm a little surprised at the number of people jumping up and down at the idea of a 23% p.a. return when the XAO has done around 30% since March.




A lot of people lost 50% prior to March .



skc said:


> Guaranteed vs market return... quite different animals.
> 
> No matter how you look at it a 20% guaranteed return has a place in anyone's investment portfolio.




Agreed, borrow more money and/or put unused funds into it. Free 20%.


----------



## Trembling Hand (2 August 2009)

Julia - There are many who haven't the skill to even keep their capital let alone beat 20%.

Skc -  the numbers need twikin' but you can see the concept. What after 1 year of operation Max monthly DD was 3% on funds. I reckon I could convince "investors" that for example 12% is adequate DD protection.

Or if we went to say quarterly guarantees (ie 5% per quarter, better for me, bit better compounding for investors).

On the other traders, yes thats the idea of sorts but I'm not thinking usual fund structure, that too is a little "outside the box" but I'm not going to spew that idea up here. Yet


----------



## Timmy (2 August 2009)

prawn_86 said:


> Kincella,
> 
> Believe it or not but this is a stock market forum, hence the stock market focus.
> www.aussiepropertyforums.com is a property forum, hence the property forcus.
> ...




Makes sense.


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## kincella (2 August 2009)

mods, do you really believe I am  unaware of the focus of ASF ...as a stock forum.......so I now have 2 mods needing to point it out to me

ASF also has a huge following for both the property threads

I was not detracting from the stock, I was giving an alternative to the cash side of the subject...

and as for the property forum....I put in a big effort trying to entice bloggers over there.....to no avail....all the bloggers on the ASF interested in property, stay on this site and have not gone over there...


----------



## prawn_86 (2 August 2009)

kincella said:


> and as for the property forum....I put in a big effort trying to entice bloggers over there.....to no avail....all the bloggers on the ASF interested in property, stay on this site and have not gone over there...




Yes i know you do a lot of work on the property forum, and it is much appreciated. I personally know how hard it is to get a critical mass at a forum.

What i was simply trying to say is that this thread is about asking if people would be interested in a 20% guarantee. If you feel you can do the same (or similar) with property, then why not start a thread on that so as not to go off topic?


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## Ageo (2 August 2009)

Well hypothetically if it were to be a 20% guarantee of some sort where you would not lose any capital, then the no brainer would be to gear up and borrow as much as possible (even at a 10% loan rate your still making 10% with OPM and not doing any work for it).

Sounds good eh


----------



## Julia (2 August 2009)

skc said:


> No matter how you look at it a 20% guaranteed return has a place in anyone's investment portfolio.



Wouldn't matter to me if it were 100% 'guaranteed' return.  Still wouldn't hand my money over to anyone, especially via an anonymous internet forum.

(TH:  that is a general statement, not specifically an expression of distrust towards you personally.)


----------



## Trembling Hand (2 August 2009)

Julia said:


> wouldn't hand my money over to anyone, especially via an anonymous internet forum.




Hehe.

Neither would I, But if someone finds one that is set up in the real world along the lines of doctorj's conditions at post 121 please let me know.


----------



## nunthewiser (2 August 2009)

why are you hypothetically offering this ? is it for your own enrichment ? is to help your brother man ? why?


----------



## Trembling Hand (2 August 2009)

nunthewiser said:


> why are you hypothetically offering this ? is it for your own enrichment ? is to help your brother man ? why?




I am hypothetically offering it here as discussion in out of the box thinking and entrepreneurial leveraging of a skill that one may or may not have.

I mean really this place is a bit of a joke when it comes to business thought. it never really gets past,

1. Day trading for a living off $10,000 
2. Property always goes up 
3. Chasing the next penny dreadful that will be FMG. 


Where are the big thinkers? Tech's exceptional wealth thread drew not much in ideas.

Maybe I should start another forum,

Aussie Entrepreneurs Forum - nah that is a paradox 


EDIT; or were you asking why I would personally be offering this in the real world, if I chose to?


----------



## nunthewiser (2 August 2009)

Trembling Hand said:


> I am hypothetically offering it here as discussion in out of the box thinking and entrepreneurial leveraging of a skill that one may or may not have.
> 
> I mean really this place is a bit of a joke when it comes to business thought. it never really gets past,
> 
> ...





intresting .......... thanks for the response

fwiw in tech,s "wealth" thread there was quite a few intresting and innovative comments BUT yes a distinct lack of "ideas' for the amount of members on this site .......but isnt that in all walks in life ? 10 ppl have an idea and them 10 ppl end up working for the one guy that gets up and does it


----------



## nunthewiser (2 August 2009)

Trembling Hand said:


> I
> 
> EDIT; or were you asking why I would personally be offering this in the real world, if I chose to?





yes that was my original meaning to my question ......


if none of my business thats fair enough


----------



## Trembling Hand (2 August 2009)

nunthewiser said:


> yes that was my original meaning to my question ......
> 
> 
> if none of my business thats fair enough




Got a few miles to run first, then some beers to sink. Back lata with a skin full.


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## Julia (2 August 2009)

Trembling Hand said:


> Where are the big thinkers? Tech's exceptional wealth thread drew not much in ideas.



Have you considered that not everyone feels disposed to share their ideas/wealth creating strategies on a forum?


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## trainspotter (2 August 2009)

Julia said:


> Have you considered that not everyone feels disposed to share their ideas/wealth creating strategies on a forum?




I'm with you Julia as I do not want to be ridiculed for my strategems that others will think crude and baseless in their computations etc. 

I have looked into TH's model and it really is the goods and has been verified by the mod squad. Would I know how to do it? Nope. Would I attempt to do it. Nope. But it works nonetheless.


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## Trembling Hand (3 August 2009)

Julia said:


> Have you considered that not everyone feels disposed to share their ideas/wealth creating strategies on a forum?




Yep. That’s a very good explanation. You could also say that is the reason why any such discussion never gets off the ground. Not sharing & discussing thoughts, problems, solutions & possibilities whether they are yours or someone else’s (is that a word ) is always the best way to achieve something


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## kenny (3 August 2009)

Thanks TH and contributors for a thought provoking thread. For a newbie like myself; trying to read this thread in brief snatches during the day has been an eye glazing exercise.

In your hypothetical TH, it seems that your risk hopefully pays off the longer the clients stay with you (assuming success in the first year). I think it is a great business idea assuming as others have pointed out; the involvement in running the set up does not detract from delivering the performance necessary to make it fly.

Whether people out there have the skill or not to get decent returns, I know from experience, there are a lot who neither have the time and/or the inclination to educate themselves to a level where they can do so. That's a big reason why managed investments thrive. A discretionary trading account system with an innovative twist would certainly appeal to some, I think.

Am I right in understanding the guarantee applies to the initial investment? Would the guarantee be able to apply to the escalating total during the year much like the High Watermark set ups of various products out there? Perhaps the guaranteed level might be reset at intervals during the year? Or am I being silly and may as well ask for a shiny set of steak knives while I'm at it? 

Cheers,

Kenny


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## kincella (3 August 2009)

Ok I will wade into this again....I am a professional (leave blank).......thats my day job, it earns good money....but I also make some easy money in property, both yearly revenue roughly $100,000....and then every couple of years or so I  make some exceptional profits, in capital gains on the properties.....
all this and have been in semi retirement for past few years...which has been boring.....
I dont earn  millions pa, but I do have a couple of million built up in assets....
its not exceptional, or stunning, but I could have done better, looking back in hindsight...its just slow and steady and easy money
I have made some nice money in the stockmarket...but believe its more of a gamble these days

I think  a lot of us do contribute to the forum with ideas on how to make money...and then get a lot of flack back  anyway....
freedom on the net is due to being anonymous, but it also requires caution...
so are you a full time trader TH ? or do you have other forms of income


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## Chorlton (3 August 2009)

Trembling Hand said:


> Just purely as  hypothetical (nick off ASIC I'm not raising funds without a lic or prospectus)
> 
> If a hedge fund offered you 20% return above Australian cash rate annually would you invest in that fund? Even if they were making 60% returns or greater.




Personally, if I were interested then I would like to meet the person behind the hedge Fund before deciding......



> Would you feel cheated if you were only getting 30% of the profits? If your return was 20% but no more or no less.




Similar procedure when investing in any Bank Account,  so as long as the return was adequate I wouldn't see any problem with the fund making more.  If the initial investment is "guaranteed", then (assuming that the money can be recovered should the worst happen)  I would be interested in hearing further details....


----------



## Trembling Hand (3 August 2009)

kincella said:


> I have made some nice money in the stockmarket...but believe its more of a gamble these days



 Yes for 99% of players it will always remain so, gambling. Where the odds are not in their favour. There are others that have shown in practise that they have a few skills that puts the odds in their favour.



kincella said:


> freedom on the net is due to being anonymous, but it also requires caution...
> so are you a full time trader TH ? or do you have other forms of income



My story is pretty well know for those that stray out side the property threads : But I will tell it again.

I come from a background of small biz. Pretty much always worked for myself. From the time I realised I wasn't going to make it as a pro athlete eek I have worked on my own business. Starting at 23 I opened and sold to 'up-size' into other ventures. Started in Bendigo in a small 2 person cafe built it up to a largish 40 employee manufacturing business in Melbourne with disruption offices in Sydney & Qld and export to Asia, NZ. So went from 23 with literally nothing including skill  to 29 owning/running a biz that had a turnover well above $50,000 per week. It was a monster.

Then it imploded. Turned out I wasn't the hot shot I thought I was . Mostly it was the same old story, going so fast you forget to dot the "i's" and cross the "t's". Add that to a young punk who likes to push and it was a rags to riches back to rags story.

The year 2000 I was $500,000 in the hole after all asset sold, homeless, burnt out, broken, friendless and done!! Spent about 6 months homeless of sorts. But turned out I wasn't the best bum. The other bums failed to accept me when I would start reading the business section of old papers instead of using them for warmth, lol!! 

Long story short got over myself, dusted off the rubbish and got back into it. 2002 had another biz up and running but my heart wasn't in to it so I sold out 2004 and went full time trader after fluffing around in the market since 2001. That has been my sole source of income since then, daytrading index futures.

There is probably 8-10 people here who have had access to my trading in one way or the other that would probably total 4000 trades or more. If thats worth anything.


----------



## Mr J (3 August 2009)

> Long story short got over myself, dusted off the rubbish and got back into it. 2002 had another biz up and running but my heart wasn't in to it so I sold out 2004 and went full time trader after fluffing around in the market since 2001. That has been my sole source of income since then, daytrading index futures.




That sounds like a story in itself. Wouldn't mind hearing about how you got back on your feet, seems like it would be very hard to do. Did you get a job to get some capital, equipment etc, or did someone help you out?


----------



## Trembling Hand (3 August 2009)

Mr J said:


> That sounds like a story in itself. Wouldn't mind hearing about how you got back on your feet, seems like it would be very hard to do. Did you get a job to get some capital, equipment etc, or did someone help you out?




Ha! you have no idea, but both + some 

But there is always people with money looking for someone with a bright idea and willing to work. Which by the way if I offered you ..............


----------



## Mr J (3 August 2009)

Well I'm not someone with money .


----------



## Trembling Hand (3 August 2009)

kenny said:


> Whether people out there have the skill or not to get decent returns, I know from experience, there are a lot who neither have the time and/or the inclination to educate themselves to a level where they can do so. That's a big reason why managed investments thrive. A discretionary trading account system with an innovative twist would certainly appeal to some, I think.



 Yes I would think so too that such a  "innovative twist" would be attractive. I don't think the guarantee setup to assure the investor is that hard a thing to sort out. 



kenny said:


> Am I right in understanding the guarantee applies to the initial investment? Would the guarantee be able to apply to the escalating total during the year much like the High Watermark set ups of various products out there? Perhaps the guaranteed level might be reset at intervals during the year? Or am I being silly and may as well ask for a shiny set of steak knives while I'm at it?



No idea as this is all theoretical discussion but you would think that a quarterly high water mark guarantee would make it sweet for any investor long term.


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## Largesse (3 August 2009)

Trembling Hand said:


> I am hypothetically offering it here as discussion in out of the box thinking and entrepreneurial leveraging of a skill that one may or may not have.
> 
> I mean really this place is a bit of a joke when it comes to business thought. it never really gets past,
> 
> ...





While you raise a valid point TH, one point I will throw in,

Why the F would an entrepreneur with an actual good idea come onto a forum and tell everyone about it for free?

edit: sorry, julia beat me to the punch.... like yesterday.


----------



## Trembling Hand (3 August 2009)

Largesse said:


> While you raise a valid point TH, one point I will throw in,
> 
> Why the F would an entrepreneur with an actual good idea come onto a forum and tell everyone about it for free?




Because when you share you also learn.

I've had a few contacts from people that I would not be able to find, people that have lots of experience setting up legals/funds etc for just such ventures. Some very practical and experienced help. So far I'm better off for the effort.

Rarely does seeking info hurt, quite the opposite from my experience.


----------



## Mr J (3 August 2009)

Depends how you explain the idea. For example, how many here could take up TH's hypothetical proposal? Not many, and those that could wouldn't hurt TH's business.


----------



## Cartman (3 August 2009)

Largesse said:


> While you raise a valid point TH, one point I will throw in,
> 
> Why the F would an entrepreneur with an actual good idea come onto a forum and tell everyone about it for free?
> 
> edit: sorry, julia beat me to the punch.... like yesterday.





if u can generate your client base (for next to no cost) from the same punters you are discussing your ideas with it would make either --

a) good 
b) great  or 
c) U did what !!!  

business sense


----------



## Largesse (3 August 2009)

I guess it just comes back to the wealth vs exceptional wealth debate.

coming out and sharing your ideas may make you wealthy (a relative term vs the average punter) but to achieve exceptional wealth, you will need an exceptional idea and most likely need to develop that idea entirely yourself, reasons for this:
a) because sharing that idea may harm its value, or b) no one else/very few others will have the expertise to offer you any helpful advice, c) only *you* will have the drive to push *your *idea to greater success.

anyway, that's just my general opinion on the matter.

but specifically to your idea TH, I think your idea is conducive to discussion, and you will probably benefit greatly from it. 

I hope it goes well for you should you take the leap from hypothetical to actual.


----------



## skyQuake (3 August 2009)

Largesse said:


> I guess it just comes back to the wealth vs exceptional wealth debate.
> 
> coming out and sharing your ideas may make you wealthy (a relative term vs the average punter) but to achieve exceptional wealth, you will need an exceptional idea and most likely need to develop that idea entirely yourself, reasons for this:
> a) because sharing that idea may harm its value, or b) no one else/very few others will have the expertise to offer you any helpful advice, c) only *you* will have the drive to push *your *idea to greater success.
> ...




Here's an exceptional wealth idea I'm willing to share:

_Lotto_

 Thoughts?
Lets see where we can take this.


----------



## Trembling Hand (3 August 2009)

skyQuake said:


> Here's an exceptional wealth idea I'm willing to share:
> 
> _Lotto_
> 
> ...




Probably better investment than a standard hedge fund offering 2/20 and a sorry when the take 2/-50 in the third year. :


----------



## skyQuake (3 August 2009)

Trembling Hand said:


> Probably better investment than a standard hedge fund offering 2/20 and a sorry when the take 2/-50 in the third year. :




Perhaps a fund that tries to exploit lotto results? With a team of qants and big swinging dick traders... I mean lotto pickers.


----------



## Krusty the Klown (3 August 2009)

skyQuake said:


> Perhaps a fund that tries to exploit lotto results? With a team of qants and big swinging dick traders... I mean lotto pickers.




Believe it or not, a lottery investment fund has already been tried! 

All investments went to playing lotteries.

Strangely, I think it's been wound up!!!!!!!

I'll see if I can find something on it.


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## marknz88 (3 August 2009)

Lotto pooling is the way to go if you want to get serious about pushing the odds in your direction ever so slightly...failing that youll probably have a better chance starting up a 'lightning strike pool' and being sucessful.

Any thoughts of spinning out a venture capitilist arm TH, once you rake in the millions?


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## doctorj (3 August 2009)

Trembling Hand said:


> Yes I like that way of thinking about it. You don't get nothin' for nothin'. You could even see it happening like this,
> 
> each 1/4 I put up 20% in escrow for DD protection. And 5% of funds from my own money to the Client (locked away) and I get to margin the client funds.
> 
> ...



Most in here are happy paying away 4, 5  or even 10 times uplift on IPO for some tinpot miner with an office in West Perth, a patch of red dirt and a business plan that barely addresses anything beyond paying their own staff.   A cut of the profits (above a relatively high hurdle) shouldn't be too much for most.
Concerning #5, I don't think it's beyond a small start up operation.  In fact, I think it makes it all the more important.  The largest risk for this type of operation is transparency.  Without good governance, you're just not going to get the level of transparency investors of any meaningful size will require as a condition precedent to investment.  No matter how good the theoretical returns.

So do you think you can produce returns with these costs loaded into the business and still make a decent cut for yourself (administration, IT, independant gov)?


----------



## skyQuake (3 August 2009)

Ok I'll start the ball rolling.

_The aim is to try to predict which lotto number will come up.
_
Don't laugh. There is method to the madness.
Instead of looking at numbers, we will look at physics. With today's computing power, I believe a complex model of a lotto machine can be constructed. 
The spinning of the balls in the machine is not random. But so complex as to appear random. 
Purchasing the blueprints for the lotto machine from whatever company that makes it, and creating a computer model simulating the spins, durations, position of balls, thing that comes up with a ball (wth is that called), size and weight of balls, elasticity, etc.

Might take a few PHDs a month. Or maybe a year. The beauty is time is on your side. Moore's law means your computer power will increase, and what better time to hire maths PHDs fallen from grace than now! So recently after being booted from their lofty qant desks after 25 sigma events.

...

Failing that, we'll just buy a goddam machine and position the balls EXACTLY. (Will need help of cleaners to photograph the real one before drawing night to see position of the balls)
Then do a few spins


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## Naked shorts (3 August 2009)

skyQuake said:


> Ok I'll start the ball rolling.
> 
> _The aim is to try to predict which lotto number will come up.
> _
> ...




As long as you have at least 2 Nobel prize winners, I will invest


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## Trembling Hand (3 August 2009)

doctorj said:


> Concerning #5, I don't think it's beyond a small start up operation.  In fact, I think it makes it all the more important.  The largest risk for this type of operation is transparency.  Without good governance, you're just not going to get the level of transparency investors of any meaningful size will require as a condition precedent to investment.  No matter how good the theoretical returns.



 Yes the more I look into this the easier it would be to just nail everything right from the start and be done with it.


doctorj said:


> So do you think you can produce returns with these costs loaded into the business and still make a decent cut for yourself (administration, IT, independant gov)?




I was waiting for such a question. And this is one that comes up all the time. How much can a daytrader make? You know the type of thread,

newbie starts,"I have a cfd account which is up 300% since the beginning of the year, I'm thinking of pulling Z amount out of the house and quiting my day job" 

Well dreamers here is the answer, I have now about 8 years of sitting in front of the screens trading, admittedly the first few years data ain't that good. From that period I've seen pretty much every type of market. From a steady bull market of 03-07 into last years increasing volatility bear, then again the changing nature this year of locked up bot trading. No doubt whatever is ahead will be something diff. But,

I would stake my first born on the figure of unlevered 20% per year after brokerage return not being a to high a water mark. With the odd outliner period greatly higher than that. For example every $100,000 traded (1 SPI contract) an annual gain after brokerage of $20,000. Add in some *sensible leverage* and decent risk management, returns against drawdown are very attractive.

Not accounting for the obvious problem of scalability that day trading has (but I have a plan there ).


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## doctorj (3 August 2009)

Trembling Hand said:


> I was waiting for such a question. And this is one that comes up all the time. How much can a daytrader make? You know the type of thread,



I think you missed the purpose of the question.  It's not about how much a day trader can make, but whether or not you've _thought_ how much these things are likely to cost you and therefore how big the fund will need to be to bare these expenses and still make the minimum returns and have some left for you.

E.g. If we assume you can develop a low-drawdown strategy that makes 30% after trading costs and you have a conservative $200,000 of annual costs (audit, admin, IT, trustee fees, governance), the fund will need to be at least $3mm to be worth you doing all this.


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## Trembling Hand (3 August 2009)

doctorj said:


> I think you missed the purpose of the question.  It's not about how much a day trader can make, but whether or not you've _thought_ how much these things are likely to cost you and therefore how big the fund will need to be to bare these expenses and still make the minimum returns and have some left for you.




Oh no I have thought of that for sure. Trouble is it starts as a guesstimate (where I am now) and is slowly getting to a more realistic estimate.


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## doctorj (3 August 2009)

This might be a stupid question, but why not make it easier for yourself as guaranteed risk-free plus 10%, then 70% of everything to up to risk-free plus 25%, with you keeping the rest?


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## Naked shorts (3 August 2009)

Trembling Hand said:


> newbie starts,"I have a cfd account which is up 300% since the beginning of the year, I'm thinking of pulling Z amount out of the house and quiting my day job"




And how does this differ from what you did? (replace house with business)


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## Trembling Hand (3 August 2009)

doctorj said:


> This might be a stupid question, but why not make it easier for yourself as guaranteed risk-free plus 10%, then 70% of everything to up to risk-free plus 25%, with you keeping the rest?




actually I've been working on something like that but a suggestion came up in another thread and it seemed to make sense at the time.


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## Trembling Hand (3 August 2009)

Naked shorts said:


> And how does this differ from what you did? (replace house with business)




Because I wasn't a wage slave earning $500 per week without savings or cash and hoping to replace that small earnings in trading profit.
Because 300 % return is due to STUPID leverage not risk adjusted return,
Because 300 % return in a year tells me that you have no idea about position sizing and 1 month away from a blow up.
Because I had traded longer than 8 months
Because I could buy another biz at anytime if i failed.

Because I ..............................could go on and on.


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## kincella (9 August 2009)

you all should know by now...if it sounds too good to be true...then run as fast as you can...
another investment fund crashes, it was offering 35% returns....it seems it was just another ponzi scheme.... some people lost 3 million each...it must have been a beauty of a scheme.... but only 60 million lost

EXCLUSIVE: MORE than $60 million in investors' money is feared lost following the collapse of an investment scheme operated by a South Australian finance company.

Police and the Australian Securities and Investment Commission are poised to launch investigations into the activities of the Norwood-based ALC Group Pty Ltd, operated by well-known businessman Michael Samra. 

Sources have told the Sunday Mail a large number of those caught in the scheme were "mum and dad" investors - some of whom had lost amounts of up to $3 million each. 

Many other investors were cashed-up business people from Adelaide and Sydney, who were receiving returns on their investment of up to 35 per cent a month. One such group had invested almost $15 million. 


http://www.news.com.au/adelaidenow/story/0,22606,25903795-5006301,00.html


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## tech/a (9 August 2009)

I thought T/H lived in Melbourne???


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## Timmy (9 August 2009)

kincella said:


> you all should know by now...if it sounds too good to be true...then run as fast as you can...




TH's idea is to return 20% pa to investors.
Kincella, you have told us on numerous posts in this thread (and others) that you make 20% pa odd yourself.
So how is TH's idea 'too good to be true' please?


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## jono1887 (9 August 2009)

skyQuake said:


> Ok I'll start the ball rolling.
> 
> _The aim is to try to predict which lotto number will come up.
> _
> ...




makes sense, but I see several flaws with this.

1) The balls will have to be positioned in the same order in the chamber before they are released - even though you have planned for the cleaner to take photos, I doubt they are loaded until just before the event. And say you were able to get the order of the balls.... you would need to get each ball pointing/positioned/angled in the exact way (because the ink of the numbers means that the weight of the ball is not perfectly centered)

2) I would also assume that the air stream that mixes the ball would also not be a steady stream that you could generate. I would think that it is run by a randomising algorithm similar to that found in a card shuffling machine. I doubt that the blueprints would reveal this 'algorithm'

3) Air pressure, temperature and humidity would also vary on night to night which should also affect the balls - you really countn't determine this as even if you had sensors in the room at the time, it would be too late to put in your ticket.

- although I agree that it is clearly not random, there are quite simply to many variables that you are not able to control and determine to accurately predict.


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## kincella (9 August 2009)

i believe some investors can generate 20% returns year in year out, with the odd bonanza of a monster return...using the 3 main asset classes and leverage
but I doubt anyone, or a fund can generate returns much above 15-20 consistently over a number of years...on the stockmarket alone.....

all I am saying is with Madden, storm and other investments that went sour, it was the lure of a performance far higher than the norm, that sucked them in, then they lose it all....
the other thing to be wary of ....if it relies on just one person to perform these miracles...what happens if that person is removed for what ever reason...say sickness...the thing can fall over

but take no notice of me....I am about 80% conservative anyway, and look for a method that produces less risk and higher income as the years go by, and I prefer to manage as much as I can myself, rather than be reliant on external managers, and that includes the stocks.....

for eg; I dont like the idea of a former 'car' man now chairman of BHP, as far as I am concerned he knows nothing about a mining company....its a lot different to mining the govt for assistance for the car industry....


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## prawn_86 (9 August 2009)

kincella said:


> EXCLUSIVE: MORE than $60 million in investors' money is feared lost following the collapse of an investment scheme operated by a South Australian finance company.




Off topic i know, but one of my good mates works for the firm that will be liquidating this.


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## mazzatelli (9 August 2009)

skyQuake said:


> Might take a few PHDs a month. Or maybe a year. The beauty is time is on your side. Moore's law means your computer power will increase, and what better time to hire maths PHDs fallen from grace than now! So recently after being booted from their lofty qant desks after 25 sigma events.




Whats with the quant bashing? 
Off topic, but most[developers as opposed to traders] just program tools for traders. Once the traders f**k up, well its the model/quants fault


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## nulla nulla (9 August 2009)

If it looks too good...sounds too good...it probably is too good. How many examples of this do we need, to learn to stay away from them?


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## pursuitute (9 August 2009)

kincella said:


> for eg; I dont like the idea of a former 'car' man now chairman of BHP, as far as I am concerned he knows nothing about a mining company....its a lot different to mining the govt for assistance for the car industry....



I'm sure that's what Ford said about the aeroplane guy too....    But I can agree with some of your other points and I had pondered the same - particularly with regard to the person running the show getting hit by a bus.


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## nunthewiser (10 August 2009)

Blah Blah Blah i say . on one hand we got kincella saying "i do this and i make +20% a year on commercial real estate "etc etc ....... its easy blah blah blah .

on the other hand we got TH saying " yeah i can do it and this is how it is "

we have seen what he can produce . 

personally , yeah i,d take a small % risk on my capital with the fella BUT it would be a small % that i was WILLING to do in the search of the promised returns ...... NOT SHEEP STATIONS and not of the same calibre i would hold a property investment in .........

anyways the way i see it is one bloke promising returns available but not willing to show his actual hand and another namely TH thats shown us his hand in the past and coming up with hypothetical risk situation you either willing to take or not .....

i cant see him being too upset if no one willing to take it


its purely just another business risk and of which you control the size one is willing to take compared to the perceived reward

each to there own and show me a hypothetical dotted line..............


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## MACCA350 (10 August 2009)

nunthewiser said:


> show me a hypothetical dotted line..............



Come on TH, Nun's thrown down the gauntlet

cheers


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## nunthewiser (10 August 2009)

MACCA350 said:


> Come on TH, Nun's thrown down the gauntlet
> 
> cheers




uh? 

no gauntlet ... just pointing out i regard this hypothetical situation as just another " trade" kinda thing .......... you either take a punt or ya dont ......... 

yeah i,d take a small punt , but only a number i could live with losing if it all turned to sheeet ...... but im ok with that risk , if others are not , thats fair enough ...... dont do it ......... simple really


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## nunthewiser (10 August 2009)

anyways . i think TH currently on holidays , spending kincellas investment up the wall of a local vegas strip joint


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## Mr J (11 August 2009)

kincella said:


> i believe some investors can generate 20% returns year in year out, with the odd bonanza of a monster return...using the 3 main asset classes and leverage
> but I doubt anyone, or a fund can generate returns much above 15-20 consistently over a number of years...on the stockmarket alone.....




Are you talking about all participants in the market, or just 'investors' (i.e. handicapped longterm trading)?


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