Fund managers vs Traders

momothebored

Active member
Curious.

Why are there no famous traders on the scale of a Warren Buffett, Peter Lynch or Ben Graham?

In the end, the market only respects ROI.

Presumably if you're able to work from home and scalp for a living, and you aren't a multi-millionaire, then odds are your ROI has to be higher than any fundamental gurus'?

Also, banks, hedge funds, asset management houses would KILL for anyone able to consistently beat the index. If trading was so easy, and you could consistently outperform the index, then why aren't more traders making the headlines?

I read about people like Ed Seykota. I can't figure out why, if his ROI is real, he isn't currently being harrassed by long queues of hedge funds willing to pay him tens of millions a month?
 

momothebored

Active member
Huh? What do you mean there are no famous traders? There are all sorts of famous traders...



Yes, but why aren't they anywhere nearly as recognized as the FA guys?
Soros, Jim Rogers, Buffett, Graham, Lynch etc
Traders? The guys in Market Wizards? :|

Realistically Warren Buffett is much more of a household name than any trader I know of. Same for Peter Lynch in his heyday. If you're a trader the inverse may hold true for you because of your circles of course, but I'm referring to a more general audience.

And what about ROIs?

If you know of any trader with a consistent, PROVABLE, spectacular record of trumping the index by XX% over 10 years, drop me a PM, I'll hook him / her up with an obscene HF job offer and I'll give you a flat no questions asked US$300k referral fee if the trader takes the job. :cheesy:

That shouldn't be so hard to do given the number of wild claims about these guys circulating.
In fact, half the people in market wizards should easily meet that criteria. :p :p
 
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Martinghoul

Senior member
At least one of the people whose names you have mentioned would be classified by most people as a "trader" and very different to someone like Buffett.
 

NVP

Legendary member
Curious.

Why are there no famous traders on the scale of a Warren Buffett, Peter Lynch or Ben Graham?

In the end, the market only respects ROI.

Presumably if you're able to work from home and scalp for a living, and you aren't a multi-millionaire, then odds are your ROI has to be higher than any fundamental gurus'?

Also, banks, hedge funds, asset management houses would KILL for anyone able to consistently beat the index. If trading was so easy, and you could consistently outperform the index, then why aren't more traders making the headlines?

I read about people like Ed Seykota. I can't figure out why, if his ROI is real, he isn't currently being harrassed by long queues of hedge funds willing to pay him tens of millions a month?

you are confusing the attainment of Fame & Celebrity status with Financial Success.......... not everyone financially sucessful needs to be recognised in the street ;)

N
 

Martinghoul

Senior member
you are confusing the attainment of Fame & Celebrity status with Financial Success.......... not everyone financially sucessful needs to be recognised in the street ;)

N
+1... Wise words, indeed.
 

Rhody Trader

Senior member
you are confusing the attainment of Fame & Celebrity status with Financial Success.......... not everyone financially sucessful needs to be recognised in the street ;)

Spot on.

Taking it a step further, the fund managers need a public profile to attract investors. Several of the Market Wizards folks actually only agreed to do the interviews because of that. Why would some solo trader want the attention aside from vanity? Just puts a target on their back.
 

momothebored

Active member
you are confusing the attainment of Fame & Celebrity status with Financial Success.......... not everyone financially sucessful needs to be recognised in the street ;)

N

No I'm not.

If they were REALLY after money, they'd want to publicize their track records to attract investors. Zero to do with ego.

Even if they shied away from the spotlight, it would be IMPOSSIBLE for them to conceal their records if they were gainfully employed.

So all the posters above want to believe in the bashfully-modest ninja trader that shuns the spotlight and billions of dollars because of modesty? :cheesy:

Not being too sarcastic, but do these ninjas live in their mom's basements, feed the poor, help old ladies cross the road and fight crime after trading as well?
 
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Martinghoul

Senior member
No I'm not.

If they were REALLY after money, they'd want to publicize their track records to attract investors. Zero to do with ego.

Even if they shied away from the spotlight, it would be IMPOSSIBLE for them to conceal their records if they were gainfully employed.

So all the posters above want to believe in the bashfully-modest ninja trader that shuns the spotlight and billions of dollars because of modesty? :cheesy:

Not being too sarcastic, but do these ninjas live in their mom's basements, feed the poor, help old ladies cross the road and fight crime after trading as well?
You're undoubtedly aware that trading strategies have capacity constraints, i.e., in other words, the more capital you have, the harder it gets to make money. So there are people out there, believe it or not, who are very good traders, but who are not looking to attract investors and therefore don't need to publicize their track records.

Nobody is concealing any records. Here's, for example, one of the best traders (now retired) out there, period:
http://en.wikipedia.org/wiki/James_Harris_Simons

The estimated returns of the main RenTec fund (Medallion): "For the 11 years ending in December 1999, Medallion’s cumulative returns were 2,478.6 percent."

You think about that for a moment.
 
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momothebored

Active member
Please don't let your ninja egos be offended.

I have very little experience trading, but I do like poking fun at ninjas.

ROFLMAO!! :cheesy:
 

james1989

Well-known member
Because all traders lose money eventually, no matter what they say. Compounding the returns that some traders claim on this site would result in many, many billionaire traders, if liquidity sufficed of course.
 

momothebored

Active member
Because all traders lose money eventually, no matter what they say. Compounding the returns that some traders claim on this site would result in many, many billionaire traders, if liquidity sufficed of course.



By lose money, I take it you mean have a losing year. But that statement applies to almost all investors as well. No one wins all the time.
There are some things that aren't that straightforward.

(i) If traders were all liars and and eventually all / most lost to traditional AM, then there wouldn't BE prop trading in IBs. Obviously there are people out there that justify the XX or XXX millions (1 guy a few years back) IBs pay their top traders. And IBs aren't stupid enough to pay top dollar bonuses for 1-shot wonders.

(ii) The simplistic claims by many famous FA gurus dismiss TA as nonsense. Obviously the market doesn't agree. If it was that useless, TA would have disappeared into obscurity long ago.



There's another thread in this forum with a bunch of idiots swearing that an annualized +280% ROI isn't that hard to do (2% per week).

What's the profile of the average internet warrior - retail trader?
Someone naive, under-educated, overconfident and completely lacking realism?
Some loser that wants badly to believe he's special enough?

If 85% of FMs worldwide get beaten by the index, what makes them so special?

Last I checked, most of these FMs have the advantage of advanced info, institutional sell-side reports, decades of proprietary sector research and models, direct connections with company management, the money to develop contacts with non-public info in many cases, access to analysts covering related sectors, the list goes on much further.
 

james1989

Well-known member
I speak of longevity, not a losing year.

That is, build on an invested amount for a long time, say 20 years +.
 

james1989

Well-known member
Oh, and I agree, fund managers are absolute rubbish, but traders are worse at preserving capital, on average.
 

momothebored

Active member
I speak of longevity, not a losing year.

That is build on an invested amount for a long time, say 20 years +.

Then I disagree.
As mentioned IBs would have been the first to pull the plug on such a foolish venture long ago.

Instead they've been pumping funds shoring up quant support for their prop traders in massive ways.

Don't get me wrong, I get paid to do fundamental investing for a living, but there are guys out there that have been making it as traders, just that they either sign non-disclosure agreements with the IBs or whatever and retire quietly and never write books etc.

I do honestly, seriously doubt that they're the guys on this forum trolling and lauding their "ROIs" though. :cheesy:
 

Jack o'Clubs

Experienced member
Obviously the market doesn't agree. If it was that useless, TA would have disappeared into obscurity long ago.

Professionally speaking of course it has, or at least morphed into quantitative strategies. TA as it is generally understood on T2W is really only practised by the kind of retail trader characterised a bit later in your post.

On professional FMs remember that it is oxymoronic to expect them to beat the index en masse because it is their weight of money that drives the indices. Of course, at an individual level there are Alex Fergusons and there are Steve Maclarens.
 

momothebored

Active member
Professionally speaking of course it has, or at least morphed into quantitative strategies. TA as it is generally understood on T2W is really only practised by the kind of retail trader characterised a bit later in your post.

On professional FMs remember that it is oxymoronic to expect them to beat the index en masse because it is their weight of money that drives the indices. Of course, at an individual level there are Alex Fergusons and there are Steve Maclarens.


I'd heard of that... that the strategies IB prop traders use have very little (if any) to do with what the public understands as trading.

Would you be able to elaborate a little on quant stat and index arbitrage?
Have been wondering for a while.
 
 
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