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The mechanics of the Russian trades in this case reminds me of another money-making scheme that I think would be highly profitable, if morally wrong. It goes
by MarkMc 10y ago
The mechanics of the Russian trades in this case reminds me of another money-making scheme that I think would be highly profitable, if morally wrong.
It goes like this: You and your friend set up two separate managed funds, but the trades you make are the exact opposite of each other. When you sell USD and buy gold, your friend sells gold and buys USD. When your friend goes long GOOGL and short AAPL, you do the opposite. The size of the trades are managed such that after a year one of the funds doubles its assets under management and the other is wiped out.
Now instead of a strategy using 2 friends over 1 year, imagine a similar strategy involving 8 friends over 10 years. After a decade you have one fund that is up 700% (and 7 funds that are down 100%). You then advertise that fund to outsiders, taking a 3% commission on all assets under management. Since the fund has such stellar results its assets under management are bound to swell enormously, and that 3% is almost pure profit.