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Non-Tech : Meet Gene, a NASDAQ Market Maker
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To: gene_the_mm who wrote (1365)2/22/2002 5:42:24 PM
From: Knighty Tin  Read Replies (1) of 1426
 
Hi, Gene. I traded and managed money for a hedge fund, so I know a bit of the game. However, I never started one. I worked for one that had a private family's money behind it.

By far, the biggest problem with a hedge fund is raising sufficient capital. You cannot advertise and you don't have a record in the hedge fund format. Your other experience means that folks will be willing to watch, but actually convincing brokers to throw clients' money your way will be tough without the record on paper that they can show to well-heeled customers. Some managers backtest the trading system, but that has less and less impact as investors become more sophisticated.

The administrative and legal crapola is a hassle. There are firms that you can pay a fee to to do that stuff for you, but you have to have reasonable size to make it worthwhile.

You will probably also have to allocate commissions to brokers who provide you with clients. This and the fees for administrative junk really eat into your returns, as you will not get good prices on allocation trades.

But there is a lot of upside and the business is great fun. Also, once you make customers a bunch of money, they tend to stay with you and bring in their friends.

Good Luck.
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