5 ms·

A friend worked there as an investment advisor and wound up quitting because so many of their funds were losing to the market.

partiallypro 10y ago
Funny enough, index funds outperform hedge funds, etc, however you can outperform the indices by buying stock at 3:00-3:30pm and selling at 4:00pm every day, because that's when many funds vest, and when most of the daily volume occurs. It's a horrible irony. The "3:30 Ramp" is so well known that there's a Twitter parody account followed by huge swaths of "Finance Twitter."
- analog31 10y ago
  Is it enough to cover the typical discount broker commission?
  - hkmurakami 10y ago
    That would depend on your trading volume.
- btown 10y ago
  https://twitter.com/RampCapitalLLC https://twitter.com/RampCapitalLLC http://www.zerohedge.com/news/2013-04-08/invest-330-pm-ramp-capital-lp-266-annualized-outperformance http://www.zerohedge.com/news/2013-04-08/invest-330-pm-ramp-... I barely know anything about trading, and nonetheless this is absolutely glorious. It's grown into a subculture that rivals any subreddit, with its own set of memes, photoshops, even animations. And to listen to the ever-bullish narrator, there's no end in sight to the ramp...
- dsacco 10y ago
  >> Funny enough, index funds outperform hedge funds, etc I'm weary of reading this on Hacker News. Index funds do not beat hedge funds. That statement is devoid of nuance and accuracy, and contributes to a narrative that active managers do not have a skillset or function. Most hedge funds do not maintain performance that beats the market, but many do. This is easily verifiable.
  - fauigerzigerk 10y ago
    >Most hedge funds do not maintain performance that beats the market, but many do. This is easily verifiable. Yes, it's easily verifiable. It's also completely meaningless without a rational way to predict which ones will be outperforming in the future.
    - dsacco 10y ago
      It's not at all meaningless, because it is rational to use past performance as a predictor of future performance. Past performance does not necessarily indicate future performance, and it should not be the only predictor, but to dismiss a fund's history as inconsequential to its future is silly. A fund's prior performance is a useful signal that can be rationally incorporated into a risk versus reward decision process.
      - fauigerzigerk 10y ago
        >Past performance does not necessarily indicate future performance, and it should not be the only predictor, but to dismiss a fund's history as inconsequential to its future is silly. I'm not dismissing it unconditionally, but I'm not going to believe it unless I see the data. What's the probability of a fund outperforming given it has outperformed the year before?
        j1o1h1n 10y ago
        If it has been doing it for three of the last four years, good. If it has been doing it for five of the last seven years, dodgy. IANACFA
      - mamon 10y ago
        >> it is rational to use past performance as a predictor of future performance No, it isn't and all the funds explicitly warn you that you shouldn't do it. The point is, funds perfomance is just a bad case of "survivor bias". Many funds are created, most of them tank and you never hear about them again, but few get lucky, make some remarkable return and get their 5 minutes of fame. There is also one more problem with the "successfull" funds: let's say that some fund manager actually has a secret strategy that works. At the begining, he or she just takes some initial money from investors and invest it in whatever the secret strategy suggests. Unfortunately as soon as fund becomes popular, and people start putting more and more money in it the strategy gets thrown through the window. Why? because if you put your money in a fund that fund MUST use your money to buy stocks. Even if manager thinks that this is a bad time for buying. Therefore, as soon as fund becomes popular it stops being strategy-based and becomes "bubble based" :)
- pakitan 10y ago
  I don't see how this can be a viable strategy, if the effect is so well known. These things only work as long as few people are aware of the pattern.
prostoalex 10y ago
Why not choose the 3 or 4 that happened to perform well and buy a full-page ad featuring them in Wall Street Journal, Money and Kiplinger's, the way every other fund company had done?

partiallypro 10y ago

Funny enough, index funds outperform hedge funds, etc, however you can outperform the indices by buying stock at 3:00-3:30pm and selling at 4:00pm every day, because that's when many funds vest, and when most of the daily volume occurs. It's a horrible irony. The "3:30 Ramp" is so well known that there's a Twitter parody account followed by huge swaths of "Finance Twitter."

analog31 10y ago
Is it enough to cover the typical discount broker commission?
- hkmurakami 10y ago
  That would depend on your trading volume.
btown 10y ago
https://twitter.com/RampCapitalLLC https://twitter.com/RampCapitalLLC http://www.zerohedge.com/news/2013-04-08/invest-330-pm-ramp-capital-lp-266-annualized-outperformance http://www.zerohedge.com/news/2013-04-08/invest-330-pm-ramp-... I barely know anything about trading, and nonetheless this is absolutely glorious. It's grown into a subculture that rivals any subreddit, with its own set of memes, photoshops, even animations. And to listen to the ever-bullish narrator, there's no end in sight to the ramp...
dsacco 10y ago
>> Funny enough, index funds outperform hedge funds, etc I'm weary of reading this on Hacker News. Index funds do not beat hedge funds. That statement is devoid of nuance and accuracy, and contributes to a narrative that active managers do not have a skillset or function. Most hedge funds do not maintain performance that beats the market, but many do. This is easily verifiable.
- fauigerzigerk 10y ago
  >Most hedge funds do not maintain performance that beats the market, but many do. This is easily verifiable. Yes, it's easily verifiable. It's also completely meaningless without a rational way to predict which ones will be outperforming in the future.
  - dsacco 10y ago
    It's not at all meaningless, because it is rational to use past performance as a predictor of future performance. Past performance does not necessarily indicate future performance, and it should not be the only predictor, but to dismiss a fund's history as inconsequential to its future is silly. A fund's prior performance is a useful signal that can be rationally incorporated into a risk versus reward decision process.
    - fauigerzigerk 10y ago
      >Past performance does not necessarily indicate future performance, and it should not be the only predictor, but to dismiss a fund's history as inconsequential to its future is silly. I'm not dismissing it unconditionally, but I'm not going to believe it unless I see the data. What's the probability of a fund outperforming given it has outperformed the year before?
      - j1o1h1n 10y ago
        If it has been doing it for three of the last four years, good. If it has been doing it for five of the last seven years, dodgy. IANACFA
    - mamon 10y ago
      >> it is rational to use past performance as a predictor of future performance No, it isn't and all the funds explicitly warn you that you shouldn't do it. The point is, funds perfomance is just a bad case of "survivor bias". Many funds are created, most of them tank and you never hear about them again, but few get lucky, make some remarkable return and get their 5 minutes of fame. There is also one more problem with the "successfull" funds: let's say that some fund manager actually has a secret strategy that works. At the begining, he or she just takes some initial money from investors and invest it in whatever the secret strategy suggests. Unfortunately as soon as fund becomes popular, and people start putting more and more money in it the strategy gets thrown through the window. Why? because if you put your money in a fund that fund MUST use your money to buy stocks. Even if manager thinks that this is a bad time for buying. Therefore, as soon as fund becomes popular it stops being strategy-based and becomes "bubble based" :)
pakitan 10y ago
I don't see how this can be a viable strategy, if the effect is so well known. These things only work as long as few people are aware of the pattern.

prostoalex 10y ago

Why not choose the 3 or 4 that happened to perform well and buy a full-page ad featuring them in Wall Street Journal, Money and Kiplinger's, the way every other fund company had done?