
How hedge fund manager Steve Cohen averaged 30% returns for 18 years - eplanit
http://www.washingtonpost.com/wp-dyn/content/article/2010/04/24/AR2010042402802.html
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gte910h
Luck seems to have no mention. The existence of people who've happened to bet
on the correct side of the 9 or 10 huge events in the last 20 years surely
exist, and that is sure to make them at least moderate successes if they don't
do completely stupid things.

Given enough series of die rolls by enough different rollers, there is
inevitably going to be some with long strings of success.

It only takes looking at 1024 cases before you find someone who bet correctly
on 10 binary decisions.

There are assuredly more than 1024 funds.

He might have some special sauce, or may have done some smart things, but it
is just as possible he's just #1024

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watty
"100 portfolio managers buy and sell 100 million shares a day"

Luck should have been mentioned but the sheer volume of trades and absurd
average over 18 years makes it seem like they DO have some special sauce...
and a lot of it.

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bjoernw
since when does trading volume suggests special sauce? you can buy and sell
100 million shares a day and only trade 20 stocks.

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watty
I didn't suggest volume alone suggested special sauce, " sheer volume of
trades and absurd average over 18 years makes".

I was more trying to get the point across that they weren't rolling one die
for 18 years but rolling it thousands of times.

All this talk about special sauce is making me hungry...

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GiraffeNecktie
The article is basically a puff piece. How about a more critical view of SAC
and hedge funds in general:
<http://www.fool.com/community/pod/2005/050401.htm>

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vinhboy
I used to read these stories and salivate at the thought of these superhuman
investors. Now I read just see them as gamblers making big bets with someone
else's money.

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lotharbot
Lots of fluff in the article.

The only real explanatory investment comments I saw were about him timing his
exit of both the tech bubble and the housing/credit bubble right near the
peak, riding both to the top and then betting against both to the bottom. If
you know an investor who successfully did both of those things without making
any huge mistakes along the way, you know an investor who's averaged gaudy
returns.

What it doesn't tell us is how he "knew" those bubbles were about to burst.
How much of a role did luck have?

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bryanh
A bit of a fluffy piece but interesting to think that 30% for 18 years yields
$112 after an initial investment of $1 (1.3^18). Or $5,000 18 years ago is
worth a half a million today.

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mattiss
Insider trading?

