The 2+2 Hedge Fund
 

Sorry if this might be the wrong forum. I wanted to tap the broadest possible audience....


THE 2+2 HEDGE FUND

It is a well known fact that some of the sharpest minds in the world compete with each other daily in the financial markets, capitalizing on opportunities that are among the very largest on earth. David Sklansky needs no introduction, is 100% math-and-logic centric, has a track record of success in zero-sum games. He seems to absolutely love the game of out-smarting the smartest, at the highest possible stakes.

I hereby submit that all long-time 2+2ers draft David Sklansky as chief strategist for the yet-to-be-created “2+2 Hedge Fund ”

What better playground for David to do his thing than in the financial markets? What better investors than the set of all 2+2ers with over 300 posts? Loyal 2+2ers are already bought in, and there is no need to explain complicated concepts like variance, statistical drawdowns, risk of ruin, stop losses, etc.

We, as a group, are Sklansky disciples. By default, we will form the financial core.

We already understand. Where do we sign up?

Loyal 2+2ers can easily provide the initial capitalization, starting with absolutely nothing, by using David’s poker concepts to remove the required seed money from the poker economy.

The money is there, held in trust by the hapless losers that continue to throw good money after bad , day in and day out, in every casino and in every card room in America.

These are the losers. These are the set of all non-2+2ers.


The Best and the Brightest

Once the 2+2 Hedge Fund is established, David can hand-pick his best and brightest poker buddies to step up to the big-time: hedge fund management. David may choose to draft superior poker intellects (for example, Barry Greenstein) to help develop strategies based on poker thinking that consistently extract massive sums from the markets.

The end result, assuming a successful Year1, would be a poker PR bonanza of epic proportions.



2+2 Poker Players, Esteemed Worldwide

Poker critics worldwide will come to understand there really IS something important to learn in poker. They will come to understand that winning poker players are a high form of life. Academics may finally study winning players, seeking to understand what makes them different from other people.

More than a flash in the pan, the Sklansky-driven 2+2 Hedge Fund will put the world on notice that there is much more to poker than dramatic TV, suck-out bad beats and ‘UniBomber’ antics. On the contrary: the 2+2 Hedge Fund will elevate poker thinking to an esteemed art form. This will be inevitable, as the fund extracts billions from the markets, putting the world on notice that individuals that “think in poker” do, quite literally, rule the world.


Summary

The PR value of the Sklansky Hedge Fund will be great for worldwide poker, great for 2+2 and incredibly lucrative for David Sklansky. Not to mention the financial benefits to loyal 2+2ers, who can dollar-cost-average their poker income into an investment vehicle that will be second to none.

Re: The 2+2 Hedge Fund
 

Count me in. I'd be willing to put up some real cash in such an investment.

Re: The 2+2 Hedge Fund
 

im confused [img]/images/graemlins/confused.gif[/img] [img]/images/graemlins/confused.gif[/img]

Re: The 2+2 Hedge Fund
 

Yea, I am confused as hell here

Re: The 2+2 Hedge Fund
 

You give them money, and they try to make money off the money you give them.

Re: The 2+2 Hedge Fund
 

If these minds are as smart as you think they are, then they will realize that you can not beat the general market index in the long run. This has been proven time and time again. Two professors from Princeton I believe ran a study and concluded that the entire universe of mutual funds(you can substitute hedge fund in here also) underperformed the market by 1.4 % over a thirty year period. They even took into account fund closures, mergers, etc. Can you guess what the 1.4% average underperformace represents? Yep - that was the average fund expense ratio!!! Thus fund managers add no value whatsoever! Sklansky and the rest of the two plus two "brilliant" minds may know poker and a lot of other things, but you are basically wasting your time trying to beat the market. Yes - there may be a few exceptions you can count on one hand: Julian Robertson, Soros, Buffett, Michael Steinhardt, but you're better off just buying spyders and playing more poker my friend.

Re: The 2+2 Hedge Fund
 

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assuming a successful Year1,

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One year proves the fund will make money? Having said that, i'm in.

Tuco.

Re: The 2+2 Hedge Fund
 

Read "When Genius Failed".

Re: The 2+2 Hedge Fund
 

This is a pretty stupid idea. You're greatly underestimating the risk involved in the financial markets. Also, why in the hell would you want Sklansky to run your fund? I'd much rather put my money in Berkshire Hathaway.

Re: The 2+2 Hedge Fund
 

intriguing, but....I'd like to hear more specifics

Re: The 2+2 Hedge Fund
 

Want to make 7% guaranteed...

Build a hedge fund based on stocks who benefit solely from a weak dollar...then take out the weakest charts and PE ratios. You'll make 7% ....probably more.

Re: The 2+2 Hedge Fund
 

so basically we're backing people better than us.

this reminds me of the MIT Blackjack team. Hopefully our players won't complain we're getting too large of a cut.

Re: The 2+2 Hedge Fund
 

[ QUOTE ]
If these minds are as smart as you think they are, then they will realize that you can not beat the general market index in the long run. This has been proven time and time again. Two professors from Princeton I believe ran a study and concluded that the entire universe of mutual funds(you can substitute hedge fund in here also) underperformed the market by 1.4 % over a thirty year period. They even took into account fund closures, mergers, etc. Can you guess what the 1.4% average underperformace represents? Yep - that was the average fund expense ratio!!! Thus fund managers add no value whatsoever! Sklansky and the rest of the two plus two "brilliant" minds may know poker and a lot of other things, but you are basically wasting your time trying to beat the market. Yes - there may be a few exceptions you can count on one hand: Julian Robertson, Soros, Buffett, Michael Steinhardt, but you're better off just buying spyders and playing more poker my friend.

[/ QUOTE ]

If these minds are as smart as you think they are, then they will realize that you can not beat poker in the long run. This has been proven time and time again. Two professors from Princeton I believe ran a study and concluded that the entire universe of poker players(you can substitute hedge fund in here also) underperformed breaking even by 1.4% over a thirty year period. They even took into account card room closures, mergers, etc. Can you guess what the 1.4% average underperformace represents? Yep - that was the average rake!!! Thus poker players add no value whatsoever! Sklansky and the rest of the two plus two "brilliant" minds may know poker and a lot of other things, but you are basically wasting your time trying to beat poker. Yes - there may be a few exceptions you can count on one hand: Barry Greenstein, Phil Ivey, Doyle Brunson, but you're better off just buying spyders and playing the stock market my friend.

Re: The 2+2 Hedge Fund
 

That was quite funny, and it is interesting to compare the two. I suppose one can argue that most people do not "beat" the game of poker and only a handful make a killing, just like only a handful of "market wizards" beat the S&P 500. I can assure you that most "smart" people who work on Wall Street and I know an awful lot of them, invest their personal funds in Spyders only!!!!!! Thanks for the funny post though. I would bet that even Sklansky would agree with my post.

Re: The 2+2 Hedge Fund
 

So basically you want us to hand over our money to someone who we don't know has ever dealt with stock. And you consider it a done deal that he will make a lot of money?

Seeing how infatuated Sklansky is with the concept of math majors ruling the world, there is a pretty good chance he would blow it all on some MIT math major with a lousy business idea.

Re: The 2+2 Hedge Fund
 

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you're better off just buying spyders and playing more poker my friend.

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I don't know for sure but if I were a betting man I'd bet that you are correct.

Vince

Re: The 2+2 Hedge Fund
 

There was already a thread comparing the stock market and poker. It's a poor comparison. In poker, you're only competing against the 9 other players at the table, not millions of investors. So there's no reason to think the poker "market" should be efficient.

Re: The 2+2 Hedge Fund
 

im still confused, but i voted no to your poll as soon as the thread came out because id much rather invest in buffets fund than a professional poker player. i bet sklansky is smart enough to know that he wouldnt even invest in himself if given the opportunity. the funny thing about this forum is that there are so many brainless trolls that more people voted yes to investing in sklansky than no, but i would bet you that no more than 2 of the 16 that said yes would pony up the money.

Re: The 2+2 Hedge Fund
 

my point was that a good investor can beat the market the same way that a good poker player can beat a poker game. and you don't need to be one of the top few in the world... just as long as you're somewhat smarter than your average investor, you'll make more money than average.

that also means that a good fund manager can beat the market by more than the fund's expense ratio, just like a good player can beat the rake. the percentage of fund managers that can do this is very small, but so is the percentage of poker players that can beat the rake.

the analogy is just so perfect i had to point it out.

i would bet that even sklansky would agree with my post.

Re: The 2+2 Hedge Fund
 

Out of curiosity, do you know what hedge funds are?

Re: The 2+2 Hedge Fund
 

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Out of curiosity, do you know what hedge funds are?

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POTD!

Re: The 2+2 Hedge Fund
 

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David Sklansky <snip> seems to absolutely love the game of out-smarting the smartest, at the highest possible stakes.

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this is a joke, right?

Re: The 2+2 Hedge Fund
 

Then why has it been proven that fund managers don't beat the market in the "long" run. Anybody can beat the market in a 1,3, 5 yr period, hell even a 10 year period, but not in the long run. Look at Heiko Thieme and the American Heritage fund. He was the darling of the street slaughtering the averages, now ................... John Ballen from MFS??????? one of the best averages in a ten year period for his emerging growth fund which regressed right back to the mean with the tech meltdown.

I'm not saying it can't be beat in shorter spurts, but in general, one is better off investing in low cost index funds or spyders.

Re: The 2+2 Hedge Fund
 

You realize it is illegal to solicit US residents or citizens for investments in a hedge fund unless they are Accredited Investors or Accredited Institutional Investors.
You are violating US securities laws by attempting to sell unregistered securities.

Re: The 2+2 Hedge Fund
 

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You realize it is illegal to solicit US residents or citizens for investments in a hedge fund unless they are Accredited Investors or Accredited Institutional Investors.
You are violating US securities laws by attempting to sell unregistered securities.

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Well done! I started to post this myself.

Re: The 2+2 Hedge Fund
 

[ QUOTE ]
Then why has it been proven that fund managers don't beat the market in the "long" run. Anybody can beat the market in a 1,3, 5 yr period, hell even a 10 year period, but not in the long run. Look at Heiko Thieme and the American Heritage fund. He was the darling of the street slaughtering the averages, now ................... John Ballen from MFS??????? one of the best averages in a ten year period for his emerging growth fund which regressed right back to the mean with the tech meltdown.


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good fund managers beat the market.

Re: The 2+2 Hedge Fund
 

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good fund managers beat the market.

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Yes. Some of them do.

Re: The 2+2 Hedge Fund
 

I noticed that you made 300+ posts the line. How crafty, considering you have 332 posts. I bet if you were at 297 you would have made the line 250, right?

Re: The 2+2 Hedge Fund
 

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I noticed that you made 300+ posts the line. How crafty, considering you have 332 posts. I bet if you were at 297 you would have made the line 250, right?

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Huh? What are you talking about?

Re: The 2+2 Hedge Fund
 

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What better investors than the set of all 2+2ers with over 300 posts?

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Re: The 2+2 Hedge Fund
 

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I noticed that you made 300+ posts the line. How crafty, considering you have 332 posts. I bet if you were at 297 you would have made the line 250, right?

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After I read that part of his post, I stopped reading and was going to flame at that very same thing, but you beat me to it.

Re: The 2+2 Hedge Fund
 

[ QUOTE ]
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What better investors than the set of all 2+2ers with over 300 posts?

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I was confused because he made this a response to me, rather than the original poster.

Re: The 2+2 Hedge Fund
 

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good fund managers beat the market.

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Rarely, if they run a mutal fund. The problem is that the structure of mutual funds makes it difficult to beat the market. Besides the sky high fees, you have to allow cash on hand for redemptions, investors can force you to sell your best ideas because they got scared, etc. And most mutal fund managers are morons.

More and more mutual funds are becoming closet index funds. Buy the S&P 500 so you won't trail the index too badly, then try to find a couple good ideas to help you catch up. Mediocore performance will keep your fund going when a bad year can kill it.

Investment partnerships (hedge funds) offer a better structure for beating the market. But their performance records are either private, or suspect, so efficient market theorists have trouble using them for studies.

Warren Buffett and the other disciples of Ben Graham have pretty much debunked the efficient market theory. Buffett wrote an essay on it called "The Superinvestors of Graham & Doddsville". Their conclusion is the market is frequently efficient, but it never is totally so. An intelligent investor can always find mispriced securities.

Re: The 2+2 Hedge Fund
 

I noticed that you made 300+ posts the line. How crafty, considering you have 332 posts. I bet if you were at 297 you would have made the line 250, right?


After I read that part of his post, I stopped reading and was going to flame at that very same thing, but you beat me to it.

Beat me too! I was going to tell him I would do it if it was only open to 2+2ers with 333 posts or more.

Re: The 2+2 Hedge Fund
 

Remember that line in Rounders when Mikey walks into the Judge's poker game and says something to the effect of "Seated here are some of the finest legal minds in the city...yet there isn't a card player here." Playing cards was to those judges what managing a hedge fund would be for DS. I don't mean to take anything away from the terrific minds that run this site, but I'd say with a high degree of confidence that the consensus among 2+2 ers is that David, Mason, Ed, et al. are best served to opining on Poker and related gambling topics, and not figuring out which corporate bonds to short before the Fed makes its decision to hike the prime rate.

Re: The 2+2 Hedge Fund
 

Remember that line in Rounders when Mikey walks into the Judge's poker game and says something to the effect of "Seated here are some of the finest legal minds in the city...yet there isn't a card player here." Playing cards was to those judges what managing a hedge fund would be for DS. I don't mean to take anything away from the terrific minds that run this site, but I'd say with a high degree of confidence that the consensus among 2+2 ers is that David, Mason, Ed, et al. are best served to opining on Poker and related gambling topics, and not figuring out which corporate bonds to short before the Fed makes its decision to hike the prime rate.

Very true. It's like the Fridge when they entered him into the competitive eating competition finals. He's huge and can eat a ton, but when going against the lil japanese kid and everyone else who does that all the time, he got last place. Kiboyashi or whatever his name is ate like 53, and he ate 4. Just because you are good at something, you shouldn't assume you are better than someone who does it for a living.

Re: The 2+2 Hedge Fund
 

The reason your intuition finds it interesting is that it's true. If you took the entire universe of anything that operates like the stock market or the poker table (when some buys, others have to be selling)and you looked at the profits and losses of that entire universe (factoring out the inflow or outflow of total capital in the system) it is always going to be ZERO.
If you were to have an equal stake in everyone at a 9 person table, at the end of the day you would end up losing the rake.
If you end up owning all stocks in the market, or all funds that are available (and not allowing IPO's - the inflow of capital) you would have a net loss of trading costs or expense ratios.
That is why you don't buy everything. It is why a spyder/sp500 is a great way to get a better than average return. The SP500 is market cap weighted, and stocks at the top only get there becasue they are doing well. You are effectively getting a return that is equal to the dividends paid + the ecomonic growth of those companies + the +/- swing in what the average investor is willing to pay for those stocks. If the P/E multiple is rising you'll make more, if it is falling you'll make less. PE's expanded consistently through the 90's and everyone benefited, none more than those holding indices.
It is HARD to beat an index, but there are plenty of people who are smart enough to do it. The question is, is it worth the risk you are taking.

Re: The 2+2 Hedge Fund
 

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You give them money, and they try to make money off the money you give them.

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Or more likely, you give them money and they try to get to Mexico. [img]/images/graemlins/grin.gif[/img]

Regards Mack

Re: The 2+2 Hedge Fund
 

"Playing cards was to those judges what managing a hedge fund would be for DS. I don't mean to take anything away from the terrific minds that run this site, but I'd say with a high degree of confidence that the consensus among 2+2 ers is that David, Mason, Ed, et al. are best served to opining on Poker and related gambling topics, and not figuring out which corporate bonds to short before the Fed makes its decision to hike the prime rate."

Totally wrong. The best poker players in the "non insinctive" category got good at poker because they were good at the more general subject of analyzing things. They might be lazy or academically uneducated but they would have no trouble surpasssing the typical Wall Street mediocrity who gets paid for being merely average.

Dr. Edward Thorp
 

has a hedge fund that has averaged over 20% for over thirty years. Why reinvent the wheel?