How To Start Your Own Hedge Fund
True story.
In the mid-2000’s a minor hedge fund manager named John Paulson noticed the housing price trends in the early 2000s had far out-paced historic trends.
He decided a new trend was coming–a massive drop in home prices. Paulson made an astute bet that the prices would decline. He was right.
Then, he and his wife went on vacation.
During the vacation, Paulson’s wife went to the ATM to check the balance. When she looked at the statement, she was more than a little surprised to see the figure: $45 million.
I don’t know how Paulson became a hedge fund manager and I’m not even sure you’d want to follow a similar path, but in this three-part series, you can learn that you have access to some of the tools and technology needed to create your own version of a hedge fund.
A hedge fund is a flexible investment company that takes money from large investors. Successful hedge fund managers use risk management to increase returns using a wide range of investment vehicles.
The hedge fund managers would like you to think that only they have the magic necessary to master these types of trades. But, more tools and technology are available to the individual investor. When used intelligently, the individual trader can have just as impressive returns. In the next three days, we’ll review some of these weapons.
We’ll discuss using trend following as a method to create your own personal hedge fund.
Part two will introduce you to hedge fund’s Automated Trading and advanced technology.
Finally, we”ll wrap it up with an overview of how some investors use ETFs to facilitate diversification in their own mini-hedge funds.
is one of my favorite financial books of all time. It's an allegory about a guy who has a terrible job, and how he overcomes challenges to achieve his dreams.
Exciting post! Looking forward to the next ones..
Ultimately one of my aims is to start my own fund (probably more a CTA/Managed Futures than hedge fund)
Will you also cover the legalities/regulations, etc. for setting up a fund management structure? This is one area where I definitely need more information (although I need to finalise sucessful trading strategies first!)
Hey Jez–
Legalities and regulations are great ideas for future posts! And I’ll look into it.
However, as you point out, finding successful trading strategies is the first step. This series will explore how you can use strategies that hedge fund managers use for your own trading practice.
Great post! I can’t wait to read the next installments.