20% above cash guaranteed: Would you invest?

[MACCA350]

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

 

[mattlaw]

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

 

[Mr J]

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.

 

[Krusty the Klown]

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.

 

[sleepy]

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

 

[Trembling Hand]

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.

 

[Trembling Hand]

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

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.

 

[gooner]

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

 

[Krusty the Klown]

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!!

 

[Krusty the Klown]

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.

 

[Trembling Hand]

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

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

 

[Mr J]

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.

 

[trainspotter]

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 !!

 

[Krusty the Klown]

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.

 

[trainspotter]

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

 

[Mr J]

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.

 

[trainspotter]

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

 

[trainspotter]

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.

 

[Judd]

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.

 

[trainspotter]

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.