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Teen hedge fund manager - Wohl Capital


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Uh...so how he is a hedge fund if he's taking non-accredited investors?

 

Depending on how the fund is structured, you can have a limited number of non-accredited investors.

 

http://www.hedgefundlawblog.com/section-3c1-hedge-funds.html

 

So probably structured that way. Or, could be structured this way: http://observer.com/2014/12/exclusive-new-york-mags-boy-genius-investor-made-it-all-up/

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Guest Schwab711

Uh...so how he is a hedge fund if he's taking non-accredited investors?

 

No rules against it, you just can't take a % of capital gains as compensation.

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Uh...so how he is a hedge fund if he's taking non-accredited investors?

 

No rules against it, you just can't take a % of capital gains as compensation.

 

Definitely can't do it in Texas, without a lot of extra regulation.  I guess he could have gone that route.

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Uh...so how he is a hedge fund if he's taking non-accredited investors?

 

No rules against it, you just can't take a % of capital gains as compensation.

 

Even that is possible, at least in NJ - as long as you're not registered w/state.

 

If that's true (I don't doubt) then it's funny how the NJ only allows it when the state of NJ has no liability. Makes sense because NJ/CT are probably trying to relax certain regulations to attract big HFs

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Uh...so how he is a hedge fund if he's taking non-accredited investors?

 

No rules against it, you just can't take a % of capital gains as compensation.

 

Even that is possible, at least in NJ - as long as you're not registered w/state.

 

If that's true (I don't doubt) then it's funny how the NJ only allows it when the state of NJ has no liability. Makes sense because NJ/CT are probably trying to relax certain regulations to attract big HFs

 

The whole idea that taking a performance fee can only apply to rich people is so damn ass backwards and regressive. I think everyone here agrees that performance fees align incentives much better than do management fees. If anything, it's the latter that should be restricted. Unfortunately middle class people are stuck investing with investment managers whom only have an incentive to gather assets and stay with the herd.

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Guest Schwab711

Uh...so how he is a hedge fund if he's taking non-accredited investors?

 

No rules against it, you just can't take a % of capital gains as compensation.

 

Even that is possible, at least in NJ - as long as you're not registered w/state.

 

If that's true (I don't doubt) then it's funny how the NJ only allows it when the state of NJ has no liability. Makes sense because NJ/CT are probably trying to relax certain regulations to attract big HFs

 

The whole idea that taking a performance fee can only apply to rich people is so damn ass backwards and regressive. I think everyone here agrees that performance fees align incentives much better than do management fees. If anything, it's the latter that should be restricted. Unfortunately middle class people are stuck investing with investment managers whom only have an incentive to gather assets and stay with the herd.

 

It's funny there's interest in Senvest lately since the thinking is to prevent a situation exactly like Senvest. No clawback and no high-water mark to go with performance fees. Thus, Senvest takes on an incredibly risky portfolio and is well paid for taking on extreme risk. If everything goes great they are all rich (and investors get less than they should), however if everything goes to hell then Senvest closes up shop and changes their name.

 

It's extremely dishonest on Senvest's part not to include high-water or clawback (one or the other should be fine). Investor's in Senvest would be better off picking a diversified portfolio of high-beta names then pay the outrageous fees for a discount that will never be realized.

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Good for a laugh, huh.

 

Way to go, picking on a 17-year-old who is giving it a shot. No one's putting a gun to these people's heads and forcing them to invest alongside.

 

He sounds like he doesn't understand much about business in his interviews, but he is young and if he keeps at it, he will learn. God forbid someone branch out and try to learn a new field.

 

He will make mistakes and if he sticks with it, he will learn from them as he goes. Just as all of us have. Props to him for taking a chance; when faced with putting themselves out there, most people turtle up and hide rather than risk failure.

 

I'd rather fail a lot and learn many new things than hide for fear of losing. That's how I learned to invest, and more recently, how I learned to write copy. You try new things, folks. There isn't a perfect blueprint out there you must follow to achieve your dreams, there's always a little bit of improvisation.

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His website also seems to be close to breaking advertisement regulations.

 

This was one of my first thoughts. Aren't testimonials not allowed? And I highly doubt his results chart is compliant.

 

No they aren't, good catch. It's pretty ballsy to put up results charts as well unless they can be audited and conservatively verified. Tough to comply with if money is flying in & out. You also need waivers for this kind of trading, in writing, from clients to do each type of trade (since he has a total of $1m I assume this applies to every client).

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Good for a laugh, huh.

 

Way to go, picking on a 17-year-old who is giving it a shot. No one's putting a gun to these people's heads and forcing them to invest alongside.

 

He sounds like he doesn't understand much about business in his interviews, but he is young and if he keeps at it, he will learn. God forbid someone branch out and try to learn a new field.

 

He will make mistakes and if he sticks with it, he will learn from them as he goes. Just as all of us have. Props to him for taking a chance; when faced with putting themselves out there, most people turtle up and hide rather than risk failure.

 

I'd rather fail a lot and learn many new things than hide for fear of losing. That's how I learned to invest, and more recently, how I learned to write copy. You try new things, folks. There isn't a perfect blueprint out there you must follow to achieve your dreams, there's always a little bit of improvisation.

 

Agreed, he'll have 13 years of experience at 30!

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Good for a laugh, huh.

 

Way to go, picking on a 17-year-old who is giving it a shot. No one's putting a gun to these people's heads and forcing them to invest alongside.

 

He sounds like he doesn't understand much about business in his interviews, but he is young and if he keeps at it, he will learn. God forbid someone branch out and try to learn a new field.

 

He will make mistakes and if he sticks with it, he will learn from them as he goes. Just as all of us have. Props to him for taking a chance; when faced with putting themselves out there, most people turtle up and hide rather than risk failure.

 

I'd rather fail a lot and learn many new things than hide for fear of losing. That's how I learned to invest, and more recently, how I learned to write copy. You try new things, folks. There isn't a perfect blueprint out there you must follow to achieve your dreams, there's always a little bit of improvisation.

 

I don't think people are picking on him for the reasons you suggest. I think they are picking on him for doing things that are illegal.

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Did anyone notice this on the "Strategy" page of his website:

 

"Leverage is key to maximizing returns. We didn't reinvent the wheel with this; it's just a tried and true strategy that works again and again."  :o

 

Only a kid genius would know and say this  ::)

I know more by standing on the shoulders of giants or however the old saying goes.

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Good for a laugh, huh.

 

Way to go, picking on a 17-year-old who is giving it a shot. No one's putting a gun to these people's heads and forcing them to invest alongside.

 

He sounds like he doesn't understand much about business in his interviews, but he is young and if he keeps at it, he will learn. God forbid someone branch out and try to learn a new field.

 

He will make mistakes and if he sticks with it, he will learn from them as he goes. Just as all of us have. Props to him for taking a chance; when faced with putting themselves out there, most people turtle up and hide rather than risk failure.

 

I'd rather fail a lot and learn many new things than hide for fear of losing. That's how I learned to invest, and more recently, how I learned to write copy. You try new things, folks. There isn't a perfect blueprint out there you must follow to achieve your dreams, there's always a little bit of improvisation.

 

I don't think people are picking on him for the reasons you suggest. I think they are picking on him for doing things that are illegal.

 

Why is doing illegal things something to mock if the regulations aren't sensible? We should always question authority and even break laws so long as we're prepared to deal with the consequences.

 

Financial institutions break laws all the time, and frequently settle for less than their illicit profits. This kid isn't even harming anyone unless he's running a Ponzi scheme or something; everyone willingly gave him their capital.

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Good for a laugh, huh.

 

Way to go, picking on a 17-year-old who is giving it a shot. No one's putting a gun to these people's heads and forcing them to invest alongside.

 

He sounds like he doesn't understand much about business in his interviews, but he is young and if he keeps at it, he will learn. God forbid someone branch out and try to learn a new field.

 

He will make mistakes and if he sticks with it, he will learn from them as he goes. Just as all of us have. Props to him for taking a chance; when faced with putting themselves out there, most people turtle up and hide rather than risk failure.

 

I'd rather fail a lot and learn many new things than hide for fear of losing. That's how I learned to invest, and more recently, how I learned to write copy. You try new things, folks. There isn't a perfect blueprint out there you must follow to achieve your dreams, there's always a little bit of improvisation.

 

I don't think anyone would blame someone for having a go at investing at age 17 and trying to get experience early. I think the difference here and in some similar cases is that the guy comes across (whether he means it or not) as cocky. Portraying yourself as a "17-year old hedge fund manager" instead of as a 17 year old who is practicing investing small sums while also reading/asking questions at every opportunity in order to pick up knowledge from others. Looking at the website, he makes it sound like he is already an investing genius and will trounce the markets. Given the inability of most professionally-managed hedge funds to do this, and the naivety he clearly shows in talking about his "strategy," this is not a good way for a 17-year old to be advertising himself.

 

Basically, if he were honest and humble and said, "I am 17, and I am doing my best to learn everything I can about investing because this is what I want to do in life," then the vast majority of people would encourage that. But in reality, his message is, "I am an investment genius, I utilize leverage, options, and buying undervalued stocks like Buffett in order to provide amazing returns. Contact me and invest if you want real returns."

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Good for a laugh, huh.

 

Way to go, picking on a 17-year-old who is giving it a shot. No one's putting a gun to these people's heads and forcing them to invest alongside.

 

He sounds like he doesn't understand much about business in his interviews, but he is young and if he keeps at it, he will learn. God forbid someone branch out and try to learn a new field.

 

He will make mistakes and if he sticks with it, he will learn from them as he goes. Just as all of us have. Props to him for taking a chance; when faced with putting themselves out there, most people turtle up and hide rather than risk failure.

 

I'd rather fail a lot and learn many new things than hide for fear of losing. That's how I learned to invest, and more recently, how I learned to write copy. You try new things, folks. There isn't a perfect blueprint out there you must follow to achieve your dreams, there's always a little bit of improvisation.

 

I don't think anyone would blame someone for having a go at investing at age 17 and trying to get experience early. I think the difference here and in some similar cases is that the guy comes across (whether he means it or not) as cocky. Portraying yourself as a "17-year old hedge fund manager" instead of as a 17 year old who is practicing investing small sums while also reading/asking questions at every opportunity in order to pick up knowledge from others. Looking at the website, he makes it sound like he is already an investing genius and will trounce the markets. Given the inability of most professionally-managed hedge funds to do this, and the naivety he clearly shows in talking about his "strategy," this is not a good way for a 17-year old to be advertising himself.

 

Basically, if he were honest and humble and said, "I am 17, and I am doing my best to learn everything I can about investing because this is what I want to do in life," then the vast majority of people would encourage that. But in reality, his message is, "I am an investment genius, I utilize leverage, options, and buying undervalued stocks like Buffett in order to provide amazing returns. Contact me and invest if you want real returns."

 

I mean, no shit. Yes, he's cocky. He's 17. I was the same way at that age, granted I didn't start a hedge fund because I was a recluse and didn't know anyone outside of my immediate family.

 

As far his marketing goes? Of course it's hype-heavy. That's pretty much how marketing works. This happens in every successful form of advertising I can think of, whether brand advertising or DRM. Coke tries to associate itself with good times, and that it is responsible for making the world a more loving, caring place. And if you think the burgers the hot chicks bite in Burger King commercials look that good in real life, you've got another thing coming.

 

It's marketing. And you know what? This fucking kid, with this media coverage? He's already proven himself to be a better businessman than the majority of minor league hedge fund managers out there.

 

I can find 20 guys right now, some on this site, who have outstanding track records and not much more in the way of AUM than this kid does. And they've been doing it for years. The kid gets the "wow" factor involved with portraying yourself as a child prodigy and the free coverage that can provide. Maybe more fund managers should emulate him, rather than the other way around.

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I have to disagree. I think in this instance his short-term success is setting up long-term failure. Based on what we know about his inexperience and the riskiness of the strategies he is pursuing, it's very likely he blows up and falls flat on his face. And then all the hype and bold statements will come back to haunt him. Normally, if you fail at 17 or 18, nobody knows or cares, it would basically be expected. But when you have taken in other people's money by advertising yourself as the next Soros, and then fail miserably, that is going to wreck your image, cost you valuable relationships, and negatively affect your own psyche. Say he fails - after Googling him and seeing this, who is going to hire him to work at their fund or invest their money with him in the future?

 

In another way, he is also costing himself the ability to build valuable human capital. He could be spending his full time learning about investing and the markets. He could be putting himself in a position to intern or work for a successful investor where he could learn the trade. Instead, he is spending time marketing and talking to the media.

 

So who knows, maybe there is a tiny shot of him actually succeeding without failing, and if so then he'll have hit a real home run. But I think slow and steady will tend to win the race, and he is IMO focusing on the wrong things at this stage in life.

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I have to disagree. I think in this instance his short-term success is setting up long-term failure. Based on what we know about his inexperience and the riskiness of the strategies he is pursuing, it's very likely he blows up and falls flat on his face.

 

Yeah, you're right. He probably will fail. Most fund managers - or entrepreneurs of any kind, really - do. Not everyone is going to be a winner from their first at-bat.

 

And then all the hype and bold statements will come back to haunt him. Normally, if you fail at 17 or 18, nobody knows or cares, it would basically be expected. But when you have taken in other people's money by advertising yourself as the next Soros, and then fail miserably, that is going to wreck your image, cost you valuable relationships, and negatively affect your own psyche. Say he fails - after Googling him and seeing this, who is going to hire him to work at their fund or invest their money with him in the future?

 

This is where we disagree. I'd be willing to bet that most people wouldn't hold it against him if he does fail, and some would probably look at it favorably because it shows that he has the drive to try something on his own. That's something a lot of employers look for for a wide variety of gigs, not just in investment management.

 

And who is going to let him work for their fund or let him manage their money in the future? This happens with hedge funds all the time. John Meriwether helped blow up LTCM - one of the biggest financial blow ups of any kind ever - and he still managed to raise money for several more funds after that. And he's not the only one, either. The world is generally more willing to award second chances than we think.

 

In another way, he is also costing himself the ability to build valuable human capital. He could be spending his full time learning about investing and the markets. He could be putting himself in a position to intern or work for a successful investor where he could learn the trade. Instead, he is spending time marketing and talking to the media.

 

He could, but what's the value in that, really? Would you rather have another $1 million in AUM or another 100 basis points of return? You can learn about the markets until the cows come home, but after a point, there's not a whole lot of value in outperforming the market anymore than you have to to attract capital. And you don't even really need to beat the market to be a successful hedge fund manager so long as you market yourself correctly, and help "solve" a different problem than the maximization of returns.

 

The active management industry has lasted decades while losing to the market in aggregate. ETFs and index funds are taking share, but it's still a huge business and probably will be for the foreseeable future.

 

So who knows, maybe there is a tiny shot of him actually succeeding without failing, and if so then he'll have hit a real home run. But I think slow and steady will tend to win the race, and he is IMO focusing on the wrong things at this stage in life.

 

Well, if he does nothing, there's a 0% chance of success. By trying to launch his own fund, he has a small but real shot of obtaining ungodly amounts of wealth. It's like writing copy; if you don't have a headline, it doesn't matter how good your body copy is because no one's going to read it anyway.

 

Same principle here.

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