Author Topic: shadowing hedge funds  (Read 696 times)

billy b

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shadowing hedge funds
« on: October 01, 2018, 09:58:17 PM »
What do you guys think of shadowing these 3 hedge funds in one of my taxable accounts https://m1.finance/B0BoMvyY3, with 10 year time horizon? 

ILikeDividends

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Re: shadowing hedge funds
« Reply #1 on: October 01, 2018, 10:43:27 PM »
What do you guys think of shadowing these 3 hedge funds in one of my taxable accounts https://m1.finance/B0BoMvyY3, with 10 year time horizon?
Funny you should ask.  I think it's a spectacularly bad idea.

Coincidentally, a little more than 10 years ago, Warren Buffet made a million dollar bet, open to any who wanted to wager, that the S&P 500 index, over a 10 year period, would beat a basket of hedge funds.  The bet was accepted, and was subsequently won by Warren Buffet only quite recently.  The final results weren't even close.  The pro-hedge fund bet never had a chance.

Winnings went to charity.

https://www.businessinsider.com/warren-buffett-wins-million-dollar-bet-against-hedge-funds-2018-1

Some lucky charity got an extra million bucks just because someone was arrogant enough to bet against Warren Buffet.

So who do you want to bet against?  Or to quote a famous line in an old Clint Eastwood movie, "Do you feel lucky, punk?  Well, do you!?", delivered just as Clint famously squints even more intensely while he cocks the hammer of a revolver, aimed at point blank range, which might or might not still have one live round left in the chamber.
« Last Edit: October 02, 2018, 12:25:25 AM by ILikeDividends »

mrmoonymartian

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Re: shadowing hedge funds
« Reply #2 on: October 02, 2018, 01:53:12 AM »
What do you guys think of shadowing these 3 hedge funds in one of my taxable accounts https://m1.finance/B0BoMvyY3, with 10 year time horizon?
Funny you should ask.  I think it's a spectacularly bad idea.

Coincidentally, a little more than 10 years ago, Warren Buffet made a million dollar bet, open to any who wanted to wager, that the S&P 500 index, over a 10 year period, would beat a basket of hedge funds.  The bet was accepted, and was subsequently won by Warren Buffet only quite recently.  The final results weren't even close.  The pro-hedge fund bet never had a chance.

Winnings went to charity.

https://www.businessinsider.com/warren-buffett-wins-million-dollar-bet-against-hedge-funds-2018-1

Some lucky charity got an extra million bucks just because someone was arrogant enough to bet against Warren Buffet.

So who do you want to bet against?  Or to quote a famous line in an old Clint Eastwood movie, "Do you feel lucky, punk?  Well, do you!?", delivered just as Clint famously squints even more intensely while he cocks the hammer of a revolver, aimed at point blank range, which might or might not still have one live round left in the chamber.
ILikedThatAnswer

DFundsRLow

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Re: shadowing hedge funds
« Reply #3 on: October 04, 2018, 02:48:28 AM »
Looks like they follow the fund's 13F filings, which is unreliable and misleading at best.  Funds with over 100MM assets must file this report quarterly, and it only contains long positions - not shorts, and some other traded instruments, so you're not getting a complete picture of what the fund's actual exposure is.  Worse yet, some funds purge their book before the end of the quarter in order to only report what they want to report.   Lastly, these reports are filed a month or more after the quarter end so the report may or may not reflect what the fund currently owns.   The end result is you end up with very little insight into what the fund actually owns/is doing TODAY.

And let's not get started on the underperformance of many, many, many hedge funds in the past few years relative to the S&P...

So if you want to stock pick, go ahead and stock pick - but "shadowing" a hedge fund using just this data is like wearing a blindfold while running a marathon.
« Last Edit: October 04, 2018, 02:58:58 AM by DFundsRLow »

billy b

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Re: shadowing hedge funds
« Reply #4 on: October 04, 2018, 05:22:01 AM »
Ok, thanks for all the info.

Still Being

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Re: shadowing hedge funds
« Reply #5 on: October 04, 2018, 08:50:44 AM »
https://www.businessinsider.com/warren-buffett-wins-million-dollar-bet-against-hedge-funds-2018-1
Some lucky charity got an extra million bucks just because someone was arrogant enough to bet against Warren Buffet.

Quote
"My guess is that doubling down on a bet with Warren Buffett for the next 10 years would hold greater-than-even odds of victory," Ted Seides, a founder of Protégé Partners, wrote in a concession piece on Bloomberg View in May. "The S&P 500 looks overpriced and has a reasonable chance of disappointing passive investors."

Haha.

HeartlandBrad

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Re: shadowing hedge funds
« Reply #6 on: October 06, 2018, 03:55:27 AM »
A smart person can make really big money in hedge funds; here's the step-by-process.

1. start a hedge fund
2. invest $10 of your own money
3. get 50 of your closest friends to invest $1,000,000 each
4. charge a 2% annual fee + 20% of profits.  That's $1,000,000 gross receipts before expenses.  If there are any profits that's just gravy.
5. invest your net receipts in the the Vanguard Total Stock Market Fund VTSMX.  In less than 5 years you'll be financially independent
6. close the hedge fund and return what's left to the investors
7. if the hedge fund lost money, apologize profusely but explain that your prospectus was very clear that investors could lose money
8. get new friends

MustacheAndaHalf

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Re: shadowing hedge funds
« Reply #7 on: October 06, 2018, 11:46:50 AM »
Or to quote a famous line in an old Clint Eastwood movie, "Do you feel lucky, punk?  Well, do you!?", delivered just as Clint famously squints even more intensely while he cocks the hammer of a revolver, aimed at point blank range, which might or might not still have one live round left in the chamber.
In all this confusion I can't recall if I've picked all 6 of my hedge funds, or only 5.  So Mr Hedge Fund manager, you've got to ask yourself one question: Do I feel lucky?