Maverick Money Management - Good, Bad or Ugly?

[alwaysLearning]

I'm going to have to address this. No, he didn't have the "skill to pull it off". He took large risks, and the variance was favourable. The end result was completely out of his control. He may be very skillful, but don't disregard that fact that he's had to be quite fortunate to be able to do that.



Those who can apparently do it are on the edge, if not over it. In the end we are all vulnerable to variance, and trading aggressively just increases the vulnerability. We can't control variance, so skill isn't a factor. All we do is stack the deck and hope the cards play our way.

I understand what you are saying but I find it unlikely that this is just luck or that variance was favourable. He made many many trades over a long period of time. I'm not sure what it is, but he did make good decisions consistantly.

Isn't the proof in the pudding? I mean, 12months is plenty of time with lots of trades. If it was going to go pear shaped on him it should have happened within a year. (when taking such extreme risk)

I find it less probable or likely that a person can do that for such a long period and be 'lucky', with that number of trades over a 12month period, he must have been very skilled in my view and had a style of money management that supported his edge.

I mean, if you locked someone else up in a room who didn't have a trading background and you asked them to trade on variance and luck, would they have been able to do what he did? I really doubt it.

What about TH? TH turned $1000 into $50000 within one week? Was it just variance that enabled him to do that? I doubt it since he has done it several times. (generated big returns from a small account that is)

edit: I will agree with you though that the markets are definitely uncertain and that we can not know for sure where price will go all the time. We can't be successful with every trade just because of skill. BUT over time and with an edge, we can be profitable. So yeah, just because ivant made that much money in 12months doesn't mean that he didn't lose money along the way, rather that he chose the precise trades to ramp up and generate big results, and he did that enough times over 12months to give he return that he got.

The question I suppose would be, how many times can you 'ramp' up and get it right before you blow up? But I suppose that is where the edge and discrection comes into the equation and probably the skill factor. I don't know.

 

[Sean K]

I'm extremely conservative.

But, I look back and wish I was a maverick.

For just the bull market.

 

[nomore4s]

I'm extremely conservative.

But, I look back and wish I was a maverick.

For just the bull market.

That's the trick isn't it, knowing when to load up and when not to.

I would have preferred to be a maverick at the top of the bull market and ridden it down - pretty much what ivant did.

 

[skc]

I think of it this way...it's a 2x2 matrix...

1. Skilled with balls of steel = successful traders who take more risky approach
2. Skilled with balls of normal human tissues = successful traders who follow normal risk management
3. Unskilled with balls of steel = (3a) May get lucky or, more probably, (3b) easily wiped out
4. Unskilled with balls of normal human tissue = Inconsistent results

A perfect example - for every ivant who post on this forum, there are 20,000 new traders who blew their $1000 account. Is ivant a (3a) or a (1)? I don't know. But (3a)'s don't stay there forever - they either become a 3b, or they turn into a 1, or their balls of steel turn back into human tissue.

To me I think the right path is to move from 4 to 2 and then try 1 if you so desire. The wrong path is start at 3 and hoping to land in 3a...

 

[Sean K]

That's the trick isn't it, knowing when to load up and when not to.

Yep. I think the first time I met YT I told him the world was about to implode and we should get out of the market. Over the next year I think he made a couple of mil, while I sat on my hands with some managed funds and sold any 10% gains. Lovely in hindsight.

 

[nunthewiser]

Would of liked this pole to be open to see who voted for what.

i voted for the bottom 2 options

 

[MS+Tradesim]

i voted for the bottom 2 options

Ditto.

 

[Mr J]

I understand what you are saying but I find it unlikely that this is just luck or that variance was favourable. He made many many trades over a long period of time. I'm not sure what it is, but he did make good decisions consistantly.

....................

The question I suppose would be, how many times can you 'ramp' up and get it right before you blow up? But I suppose that is where the edge and discrection comes into the equation and probably the skill factor. I don't know.

I'm not saying skill wasn't involved, as skill makes it far more likely to experience such a result. Without skill, there's almost no chance that someone could accomplish a similar feat over what I assume is a decent sample. I'm just saying that he must have been trading very aggressively, and could easily have finished with a fraction of what he has, have a large enough draw down to make trading not worthwhile etc. Hell, he may have easily finished with more, as I'm assuming a few good trades significantly affect the balance.

What about TH? TH turned $1000 into $50000 within one week? Was it just variance that enabled him to do that? I doubt it since he has done it several times. (generated big returns from a small account that is)

Skill just gives him a much better chance of doing it. When I said skill is irrelevant, I mean when it comes to just how much we make. I didn't mean to say it wasn't influential, just that EV (skill) does not determine the result, it merely influences it. Hence the "stack the deck and hope it goes our way" comment.

 

[Cartman]

I think of it this way...it's a 2x2 matrix...

1. Skilled with balls of steel = successful traders who take more risky approach
2. Skilled with balls of normal human tissues = successful traders who follow normal risk management
3. Unskilled with balls of steel = (3a) May get lucky or, more probably, (3b) easily wiped out
4. Unskilled with balls of normal human tissue = Inconsistent results

A perfect example - for every ivant who post on this forum, there are 20,000 new traders who blew their $1000 account. Is ivant a (3a) or a (1)? I don't know. But (3a)'s don't stay there forever - they either become a 3b, or they turn into a 1, or their balls of steel turn back into human tissue.

To me I think the right path is to move from 4 to 2 and then try 1 if you so desire. The wrong path is start at 3 and hoping to land in 3a...

nice use of numbers SKC ----

i voted for the bottom 2 options

i didnt actually vote on the poll, but ---

ive worn the "2" shoes in the past ---- cause "4" is a reality (without experience)

i'm working towards wearing the "1" shoes cause i believe "3" is also a reality (with experience --- and a lot of hard work --- which are pretty much the same thing in the end !! )

ps my 1234 is from the original poll not SKC's numbers ---- that would make no sense at all lol --

 

[alwaysLearning]

I'm not saying skill wasn't involved, as skill makes it far more likely to experience such a result. Without skill, there's almost no chance that someone could accomplish a similar feat over what I assume is a decent sample. I'm just saying that he must have been trading very aggressively, and could easily have finished with a fraction of what he has, have a large enough draw down to make trading not worthwhile etc. Hell, he may have easily finished with more, as I'm assuming a few good trades significantly affect the balance.



Skill just gives him a much better chance of doing it. When I said skill is irrelevant, I mean when it comes to just how much we make. I didn't mean to say it wasn't influential, just that EV (skill) does not determine the result, it merely influences it. Hence the "stack the deck and hope it goes our way" comment.

ahh yes definitely, I think I see what you mean now. Yeah the risk of ruin is there whether you are skillful or not. So yeah, I agree with you in that sense. Nothing is certain in the world of trading that I've observed.

 

[Mr J]

I probably could have been clearer, but I have a habit of trying to explain things in detail, which only makes it more confusing .

 

[shag]

whats life without risk
rather apt with anzac day looming.
the market attracts risk takers.

 

[shag]

Yep. I think the first time I met YT I told him the world was about to implode and we should get out of the market. Over the next year I think he made a couple of mil, while I sat on my hands with some managed funds and sold any 10% gains. Lovely in hindsight.

i bet its better than having to tell the wife u lost a hundred or two k today...

 

[tech/a]

I havent voted.

But all 4 for me.

I have one thing to say BOTH winning and Losing as a Maverick ARE life changing.

In the early 80s I really didnt know I was a Maverick,I didnt know that I had risked EVERYTHING (In property). I had no concept of RISK.

Over 3 yrs
It cost me our home,my marriage,destroyed my business,and lost all but my best of friends.I came terribly close to bankruptcy---I could smell it!


In the late 90s I knew my RISK,I knew the consequences of that risk,I was able to quantify that risk.(In Property).

Over 5 yrs
I'm Building my Mc Mansion,I'm very happily married,My business went from strength to strength,still got my best of friends.

Now I can retire if I wished---I dont wish.

I no longer need to be a Maverick.

I really think that to really excel we need a good dose of Maverick in us all.

 

[saiter]

This thread has inspired me to risk all my capital on a single stock. Thanks guys!

 

[MS+Tradesim]

This thread has inspired me to risk all my capital on a single stock. Thanks guys!

Red or black?

 

[tech/a]

This thread has inspired me to risk all my capital on a single stock. Thanks guys!

You make an excellent Maverick.
If your happy with the consequences(+ or -) then Go for it.

 

[Cartman]

I havent voted.

But all 4 for me.

I have one thing to say BOTH winning and Losing as a Maverick ARE life changing.

In the early 80s I really didnt know I was a Maverick,I didnt know that I had risked EVERYTHING (In property). I had no concept of RISK.

Over 3 yrs
It cost me our home,my marriage,destroyed my business,and lost all but my best of friends.I came terribly close to bankruptcy---I could smell it!


In the late 90s I knew my RISK,I knew the consequences of that risk,I was able to quantify that risk.(In Property).

Over 5 yrs
I'm Building my Mc Mansion,I'm very happily married,My business went from strength to strength,still got my best of friends.

Now I can retire if I wished---I dont wish.

I no longer need to be a Maverick.

I really think that to really excel we need a good dose of Maverick in us all.

now that is a post from someone who has had "experience" lol ---

age/marital status/commitments/financial security/reason for doing whatever/ etc etc are what determine what we do as individuals

perhaps we are simply pre-programmed to behave as dictated by our cellular constituency !! --- who really knows what makes us do what we do !!

and do we deserve to take credit/feel pride if we are successful at something ---- maybe we are just lucky to be who we are (or unlucky, depending on the circumstances !!)

 

[tech/a]

now that is a post from someone who has had "experience" lol ---

age/marital status/commitments/financial security/reason for doing whatever/ etc etc are what determine what we do as individuals

perhaps we are simply pre-programmed to behave as dictated by our cellular constituency !! --- who really knows what makes us do what we do !!

and do we deserve to take credit/feel pride if we are successful at something ---- maybe we are just lucky to be who we are (or unlucky, depending on the circumstances !!)

Cartman

let me add this.

My spectacular Failure would be seen by most as terrible bad luck---18% interest rates and another 6% default on top of that!

My Spectacular Success would be seen by most as tremendous stroke of luck---the biggest housing boom seen in a lifetime.

ON REFLECTION

I see the first as ignorance.
The second as experience.

 

[Cartman]

Cartman

let me add this.

My spectacular Failure would be seen by most as terrible bad luck---18% interest rates and another 6% default on top of that!

My Spectacular Success would be seen by most as tremendous stroke of luck---the biggest housing boom seen in a lifetime.

ON REFLECTION

I see the first as ignorance.
The second as experience.

its all good Tech --- i know where you are coming from ---- in your above post, the word "most" would be the operative word ---

honesty with oneself is an admirable attribute !!