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Strategies & Market Trends : BAK - Investing
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To: thatsnotluck who wrote (1571)3/30/2012 9:15:12 AM
From: Flipper20582 Recommendations   of 3249
 
Re: Quarter End Buying Panic

""your net position has been under 50% for some time now. just curious how the fund is doing YTD""

This is the one reason I don't run money and I commend you Batman. Clents want to know "what they made", but as a manager you work on risk-adjusted returns, trying not to blow them out of the water. But clients don't understand risk unless you lose them money, then you effed up. Do it enough times and they move on, usually to something riskier I found. Just because stock XZY went from $20 to $25 does not mean it was a good buy, they don't always understand that. If that stock could easily have gone to $10 as $25 then it was not a good bet. You need to have the upside be larger then the downside risk. It is obvious, but not to most I found. Money flows into a bubbly environment raise prices but does not make them a good bet.

I run some family and friends accounts and I tell them up front I am mostly in cash a lot. Good buy prices are rare. Just "buying the market" is not good management and I never do that. But I take big positions when prices are right and trade out of the excess fairly fast on recovery. Hard to do with a lot of accounts that don't really get that.

I wish there was a "risk-adjusted return" model that most could use and understand. You tell them you are being conservative but I know most don't really understand that. And probably neither do we as there is not clear way to define it.
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