I've been trading stocks and options for 15 years ... After watching your videos I can say ive been just lucky ... financial education is needed. Thank you for the videos
So much good info in this series... I was surprised to see how treasury bonds outperformed some of these quantitative hedging stratagies (I verified myself too).... I think my best bet as a retail investor is to just diversify with etfs and portion some to fundamental stock picking
Thankyou for clearing up the use (misuse?) of the term 'arbitrage'. I was beginning to doubt my understanding of the meaning of the term, as many of the 'arbitrage strategies' I'd been reading about didn't seem to be arbitrage to me. It reminds of Psychology's redefinition of terms, It's small wonder people find finance confusing - the language *looks* like English, but obviously isn't. One day someone will call Bernie Madoff's strategy 'Customer Arbitrage'. :-)
Patrick first of all thanks for taking the time of doing this videos, I´ve been watching them since day 1. I´m 24 years old and I´ve been into investing/trading for a couple of years now I have experience in stocks, cryptos and CFD (I didn´t did well there). My question would be if you could make a video for all the people getting into trading/investing about choosing your "set up" and all the things to consider for example, picking your broker, choosing the instruments you will operate (options, futures, CFD, regular stocks and others) and giving a wider perspective of all the market participants, the relationships between them and their particular interest. What was your take on the corporate finance that you could apply as a retail trader/investor, for sure there are many of them, it would be great if you could share them as well. Thanks again and keep the great content. Sincerly, your fan.
Great question EF, has PB gotten to this yet? I myself incidentally am at the exact same stage after having spent the past 2 years swallowing as much information from books well regarded in the industry and want to press ahead. Happy to spend a premium to play how the big end of town plays on Bloomberg terminals and all the rest, but yes good question..
Hi Patrick, thankyou for taking the time to produce this series. I have always assumed that the purpose of non-correlated investments was to provide an opportunity to rebalance during periods when the rest of the portfolio is down, enabling the investor to take advantage of the opportunity the downturns provide. Essentially they allow the investor to take advantage of an opportunity which may otherwise not exist. Is this correct?
He talks about this in part 2...withdrawing money from a beta-neutral hedge fund when the market is down (beta neural outperforms market) and adding money to a beta-neutral hedge fund when the market is up (beta neutral underperforms market) is basically the same as buying when the market is high and selling when the market is low.
CALPERS has been allocating more of its capital towards Private Equity which, in my opinion, is much more dangerous than hedge funds due to lower liquidity in PE transactions.
Unfortunately CALPERS is a bit of a joke in the industry. They seem to always allocate to whatever recently worked, they also pay the highest fees due to a lack of sophistication. Most investors of their size demand big fee discounts and typically get them.
Patrick Boyle Yes, but I think that is due to their inability to consistently make their hurdle rate of 7%, forcing them to allocate more towards PE, which seems amateurish due to its higher beta correlation to the markets. Honestly, I think they should of gone with a higher contribution route from future pensioners instead of taking on more risk.
@Nick James There are a number of PE ETFs and stocks. The underlying strategy is illiquid, the investment vehicle is not. A long/short hedge fund has a very liquid strategy, but the investment vehicle is not.
Have a good prospectus, talk to a lot of people about your strategy without giving away the details, have a positive attitude, a good marketing plan etc etc. My tip: make it limited to join i.e. there are only 100 investor positions available for $100.000 minimum per position. These are just my two cents...
Can you explain how hedge funds are able to lever up so much to capture tiny returns? Don’t they have to pay interest on all that borrowed money? How can a tiny return on each increment of borrowed money be enough to pay that interest?
Would it be the case then that regression of the returns of a 2x the market hedge fund against the market returns would show a coefficient (beta) of around 2 and an intercept (alpha) of near-zero?
On fixed income arbitrage - are the spreads so small that they cannot use credit derivatives to hedge that exposure from market turmoil and thus eliminate that risk?
Can I invest in a hedge fund that invests in hedge funds which invest in indices of hedge funds which invest in private equity firms which invest in common and preferred stocks?
I love the subtle, dry humor combined with your insane level of knowledge about the markets.
"Convertible Bond" - LOL
I've been trading stocks and options for 15 years ... After watching your videos I can say ive been just lucky ... financial education is needed. Thank you for the videos
there's no way you've been lucky for 15 years straight
So much good info in this series... I was surprised to see how treasury bonds outperformed some of these quantitative hedging stratagies (I verified myself too).... I think my best bet as a retail investor is to just diversify with etfs and portion some to fundamental stock picking
look for fundamentally gifted companies which are neglected by the general public
Thankyou for clearing up the use (misuse?) of the term 'arbitrage'. I was beginning to doubt my understanding of the meaning of the term, as many of the 'arbitrage strategies' I'd been reading about didn't seem to be arbitrage to me. It reminds of Psychology's redefinition of terms, It's small wonder people find finance confusing - the language *looks* like English, but obviously isn't. One day someone will call Bernie Madoff's strategy 'Customer Arbitrage'. :-)
"George Soros made one billion dollars in a day, which back then was a lot of money..." man here I am trying to make 10k in a year
I hope it still counts as quite a lot of money.
I am here again to have a golden value learning time thanks to Mr. Boyle. I am so excited
Thanks Moby.
This is an amazing video. So well explained. The physiology of finance.
Patrick first of all thanks for taking the time of doing this videos, I´ve been watching them since day 1. I´m 24 years old and I´ve been into investing/trading for a couple of years now I have experience in stocks, cryptos and CFD (I didn´t did well there). My question would be if you could make a video for all the people getting into trading/investing about choosing your "set up" and all the things to consider for example, picking your broker, choosing the instruments you will operate (options, futures, CFD, regular stocks and others) and giving a wider perspective of all the market participants, the relationships between them and their particular interest. What was your take on the corporate finance that you could apply as a retail trader/investor, for sure there are many of them, it would be great if you could share them as well.
Thanks again and keep the great content.
Sincerly,
your fan.
Great question EF, has PB gotten to this yet? I myself incidentally am at the exact same stage after having spent the past 2 years swallowing as much information from books well regarded in the industry and want to press ahead. Happy to spend a premium to play how the big end of town plays on Bloomberg terminals and all the rest, but yes good question..
@@kurtjohnston6620 I think he has not seen it yet. Maybe he never will...
Wanna start a hedge fund? I do
@ef9984 how’ve you gotten on?
Very interested, well documented, thank you for this insight
i know you did these videos a few years ago but still really good content, cheers
Excellent!!! Thank You!
Thanks Mr Boyle. Very enjoyable.
solid value
straight to the point with some convertible bond humor haha
Can you do a video on how much leverage one can get from prime brokerage for certain strategies. Like convertible arbitrage.
Hi Patrick, thankyou for taking the time to produce this series. I have always assumed that the purpose of non-correlated investments was to provide an opportunity to rebalance during periods when the rest of the portfolio is down, enabling the investor to take advantage of the opportunity the downturns provide. Essentially they allow the investor to take advantage of an opportunity which may otherwise not exist. Is this correct?
He talks about this in part 2...withdrawing money from a beta-neutral hedge fund when the market is down (beta neural outperforms market) and adding money to a beta-neutral hedge fund when the market is up (beta neutral underperforms market) is basically the same as buying when the market is high and selling when the market is low.
@@thefreeaccount0 Thanks Michael.
Early callability and special dividends on convertible.
Blomberg terminals...brilliant
are coding necessary for a hedge fund?
There is 2 dislikes on this video, I want names damn it, who could dislike this man?
CALPERS has been allocating more of its capital towards Private Equity which, in my opinion, is much more dangerous than hedge funds due to lower liquidity in PE transactions.
Unfortunately CALPERS is a bit of a joke in the industry. They seem to always allocate to whatever recently worked, they also pay the highest fees due to a lack of sophistication. Most investors of their size demand big fee discounts and typically get them.
Patrick Boyle Yes, but I think that is due to their inability to consistently make their hurdle rate of 7%, forcing them to allocate more towards PE, which seems amateurish due to its higher beta correlation to the markets. Honestly, I think they should of gone with a higher contribution route from future pensioners instead of taking on more risk.
Can you not have an illiquid strategy but a liquid vehicle and vice versa?
@Nick James There are a number of PE ETFs and stocks. The underlying strategy is illiquid, the investment vehicle is not.
A long/short hedge fund has a very liquid strategy, but the investment vehicle is not.
Crazy question.. what’s it take to open your own hedge fund?
Start small with a few grand and convince people to give you their money by making convincing stocks and assets I reckon
Have a good prospectus, talk to a lot of people about your strategy without giving away the details, have a positive attitude, a good marketing plan etc etc. My tip: make it limited to join i.e. there are only 100 investor positions available for $100.000 minimum per position.
These are just my two cents...
What books or resources would you recommend to know more about managed futures?
I'd start with the Market Wizards series.
Can you explain how hedge funds are able to lever up so much to capture tiny returns? Don’t they have to pay interest on all that borrowed money? How can a tiny return on each increment of borrowed money be enough to pay that interest?
Great information
Glad it was helpful!
Awesome video. Thank you!
Good Video. Thanks.
How can you make money in a low volatility portfolio ?? Why is volatility “bad”? Thanks
Would it be the case then that regression of the returns of a 2x the market hedge fund against the market returns would show a coefficient (beta) of around 2 and an intercept (alpha) of near-zero?
That is correct.
Aren't REITs not their own asset class as their returns are explained by small value and bonds
On fixed income arbitrage - are the spreads so small that they cannot use credit derivatives to hedge that exposure from market turmoil and thus eliminate that risk?
Can I invest in a hedge fund that invests in hedge funds which invest in indices of hedge funds which invest in private equity firms which invest in common and preferred stocks?
Quant traders call it level 5 trading.
Someone should set up a funder funds fund and call it the funder cats 🤣
1:03:00
whats the return on macro