Starting an investment business - Page 5

Quote:

Originally Posted by NameBack 


Ah, well, since we're just following what the algorithm says, emotion shouldn't play into it at all. We have very strict rules governing everything, so I'm not really making any decisions on my own judgment or emotions. So hopefully that will help us stay impartial.
I'm managing a lot of the actual modeling as well, and my partner is doing business dev too -- so at the moment at least we're splitting the burden a fair bit. Although I probably skew more on the fundraising side and he more on the analytics side.

See Roger Lowenstein's "When Genius Failed" - Merriweather and his All-Star's simply followed the alogrithm until...

I'm sure your outfit is adequately quant-ed up but it is still hard for me to swallow as a value investor. How do you not go crazy checking your swings every 10 seconds or owning a company for less time than it takes to make a latte? I get it, you have confidence from a few dry runs but I would much rather find a five year track record of improving profits at a low P/E trading below book value with a competent leadership group who are passionate about what they do.  Rare but as Puddin' Head Dave Wilson would say "Put all your eggs in one basket, and watch that basket."

Although I strongly believe quants and the Chicago School are total bullshit, I wish you nothing but success. 

PS - As an attorney, please see an attorney immediately.  I cannot tell from the thread but are you incorporated? Make sure you and your partner are not personally liable for any loses - it could get ugly in a hurry, ask JWM.

You are correct on the Chicago EMH...I did not edit.  Thank you for fleshing out the difference, I failed at making that point  - I just finished Skildelsky's book on Keynes revisited, and I'm warming to him.

I get why the whole algo thing is attractive, Simmons showed how well it can actually work.

My taste is still for value investing - it doesn't matter how many people have those tools available to them, the principles are still applicable to almost any value situation.  Value investors often do not see the world the same - see Berkowitz and Einhorn's war of words this summer about St. James.  The goal of value investing is to find undervalued assets while mitigating risk by purchashing at a low price and that gives me piece of mind.  The world will always have pockets of undervalued assets and overvalued tulips, easier said than done but value investing will never die because prices will never perfectly match values. Trading in and out of positions increases overhead, creates taxable events, and comes with too much risk for me.

"If you don't borrow money, you can't go broke" - W. Buffet

I'm a slow and steady type of guy, I guess value investing fits my personality.

It sounds like you are in a fantastic place with all the possibilities imaginable before you, I wish you luck!