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Bottom line is anyone who offers a financial product or services needs to be audited...Initially before they hang out their shingle and on a regular basis to maintain their ongoing duty of care. They should have to pay a substantial registration fee and should have to pay annually to renew their "license" and get their new years WOF. Risk and freedom to invest as people wish is great but it should all be done on a level playing field and in full view and subject to inspection.
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Totally agree Birmanboy..
My wife is typical.. No..no.. I leave it all up to you.. As I try to explain.. Leaves her wide open to vultures...
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30% per annum is definitely possible - for a while. However, I doubt very much it has been happening here lately.
Why?
(a) Seeking high returns, and managing other peoples money, do not go hand in hand. I know this sounds silly because that is what an investor says they want to pay for, but it simply doesn't work.
To get 30% per annum over a long period, the record isn't going to read 30%, 30%, 30% etc etc etc. A record like that would almost certainly indicate something dodgy is happening.
It is more likely to read +85%, +40%, -35%, -12%, +134%, -40%, +80% etc etc.
The sort of person that hands over their money to others to invest is usually the sort of person that can't handle that sort of volatility and wants to take back their money at the bottom, not realising that a strategy aimed at 30% is inherently volatile and risky and bad years are utterly guaranteed.
(b) 400mil or so under management is starting to get to the level where you shouldn't even be aiming for 30%.
Many of the strategies you need to employ - under-diversification, overweighting small caps etc etc - start to fail at those sorts of numbers.
This is why Buffett has always said - and I believe him - that he could do 50% per annum with 10 million, but has continually reset expectations downwards as he got bigger.
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My instinct (and I have zero insider info here) and that this guy probably did start off honest and and could well have achieved those high returns for a while.
However, as his investors aged, and their demand for cash grew, given strategies that involved illiquid positions in small caps, even if we assume 100% honesty and integrity, you can easily see how problems could occur, just because of the size outgrowing the strategy.
Bottom line : Manage your own money, yourself. If you don't enjoy doing so, give it to the poor.
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Never try to teach a pig to sing. It wastes your time and annoys the pig.
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 Originally Posted by BIRMANBOY
Shuffling cash well is all it needs...and willing investors "letting it run". I suppose one defense is periodically taking all of the capital and all of the returns out but generally this is discouraged (obviously). When in doubt...take it out.
For any newbies reading, this is very good advice.
Term deposit maturing? Cool - go through the motions of sending it to another bank, even if the rate is identical. You'll establish an extra relationship, have to follow through the accounting etc etc. You'll find out if you're where you thought you were - or if your guy is actually Stephen Versalko.
Colleague at work says they're happy to pitch in and do overtime, if you ever need it? Cool, need it soon - test it out.
Girlfriend says she doesn't mind you drinking with the guys? Cool - do it soon, do it often and for gods sake, do it well before you get married.
Bottom line : Words are really easy, actions say it all.
Any situation where you're led to believe something will *always* be forthcoming, in future, if only you ask, isn't worth a damn thing unless you are regularly testing it to ensure it remains true.
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Never try to teach a pig to sing. It wastes your time and annoys the pig.
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Yes SD ..wise words..(articulated more precisely than I have so thanks.)...as a side issue its interesting that to my (limited) knowledge they dont really teach fiscal responsibility or its like until you get into University and you take some accounting or finance courses. Would be good value to have a course /seminar on some of this be available to college students so larger proportion of folk have some previous exposure.
Originally Posted by Stranger_Danger
30% per annum is definitely possible - for a while. However, I doubt very much it has been happening here lately.
Why?
(a) Seeking high returns, and managing other peoples money, do not go hand in hand. I know this sounds silly because that is what an investor says they want to pay for, but it simply doesn't work.
To get 30% per annum over a long period, the record isn't going to read 30%, 30%, 30% etc etc etc. A record like that would almost certainly indicate something dodgy is happening.
It is more likely to read +85%, +40%, -35%, -12%, +134%, -40%, +80% etc etc.
The sort of person that hands over their money to others to invest is usually the sort of person that can't handle that sort of volatility and wants to take back their money at the bottom, not realising that a strategy aimed at 30% is inherently volatile and risky and bad years are utterly guaranteed.
(b) 400mil or so under management is starting to get to the level where you shouldn't even be aiming for 30%.
Many of the strategies you need to employ - under-diversification, overweighting small caps etc etc - start to fail at those sorts of numbers.
This is why Buffett has always said - and I believe him - that he could do 50% per annum with 10 million, but has continually reset expectations downwards as he got bigger.
--
My instinct (and I have zero insider info here) and that this guy probably did start off honest and and could well have achieved those high returns for a while.
However, as his investors aged, and their demand for cash grew, given strategies that involved illiquid positions in small caps, even if we assume 100% honesty and integrity, you can easily see how problems could occur, just because of the size outgrowing the strategy.
Bottom line : Manage your own money, yourself. If you don't enjoy doing so, give it to the poor.
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Originally Posted by Xerof
Can someone tell me how he was able to take $439m from the public without a prospectus?
was it the same way Hubbard did with Aorangi et al?
He was only looking after the money of professional investors .....the ones who know better and don't need looking after
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Oh them....... oh right, so nothing to be worried about then......
jeez, I hope he doesnt hold the same junior explorers as me, Fisk will trash the prices with that sort of volume 
Last edited by Xerof; 12-11-2012 at 05:13 PM.
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Originally Posted by Xerof
Oh them....... oh right, so nothing to be worried about then......
jeez, I hope he doesnt hold the same junior explorers as me, Fisk will trash the prices with that sort of volume
Might not be anything to trash ........http://www.stuff.co.nz/dominion-post...sing-from-fund
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Not looking good thats for sure. I might start digging around in the backyards of his properties if I was Fisk...Hopefully not all gone on wine, women and arias.
Originally Posted by stoploss
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Originally Posted by Xerof
Oh them....... oh right, so nothing to be worried about then......
jeez, I hope he doesnt hold the same junior explorers as me, Fisk will trash the prices with that sort of volume
Well at least they haven't found that sort of volume so far... although you can check if your junior explorers are on what they've found so far:
http://www.pwc.co.nz/PWC.NZ/media/pd...ember-2012.pdf
Look to the last few pages.
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