First off, the EMH is a theory only, markets are not efficient. Am I really that much worse than all the other hedge fund managers that rob small time investors of any shot of beating the market? Insider trading is everywhere, and it is one of the primary reasons hedge funds on average usually outperform the market. Meaning my funds over the course of my lifetime will more than likely average 8-10% gains, nothing to brag about, but also not colossal losses. The only crime I am committing is not using illegal means to gain an unfair advantage over the market. Market efficiency states that their returns will pare as well as the rest of the stock market, with periods of time of higher than normal gains, and periods of time where there are higher than normal losses. As for your super rich friends, im almost positive the things I say on an anonymous forum will not come back to haunt me 10 years from now. I don't have a lot of super rich friends and I would never try to convince one of my moderately rich friends to invest everything with me. Monkeysama:Now that you've told us your super huge secret for hiding your losses we will all remember what a colossal douchebag you are and warn all our super rich friends to stay the hell away from you. Is there anything else im overlooking? This kind of all sounds too simple to get rich off of. Has the information on this website completely mislead me? If you're beating the market every year you are either incredibly lucky, or doing something to gain an unfair advantage over the investment community.) When one of my incubator funds do take off, I will turn it into a traditional hedge fund, dissolve all my other investment funds, and put the money into my star performer, convince a few wealthy friends to invest to bring my fund up to a respectable value, and im ready to start attracting some big time institutional investors. (That was a joke, I am strong proponent of the efficient-market hypothesis.
Eventually I figure by pure luck, or my stellar intellectual capacity. My investment portfolio will always consist of less than 15 stocks in each fund, in order to maximize the possibility of market crushing returns over a 3 year period of time. Every time I have $25,000 to throw at an incubator hedge fund I will. So here's my plan for the next 40 years of my finance career. The legal and accounting expenses are also significantly less for an incubator hedge fund as opposed to a fund that is available to outside investors. According to my research, an aspiring hedge fund manager can set up an incubator hedge fund to set up a track record with as little as $25,000 in capital.
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