Stress, not market volatility, may have the greatest impact on a fund manager's performance. Over time, highly stressed portfolio managers may find that hey struggle to make sound and timely decisions, so much so that they cling tol osing positions - rationalizing their decisions to hold as good buying opportunities.
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Vision Quest: Resources and skill can take you far. But to reach your maximum potential, you need a long-term strategy.
...as a hedge-fund leader, you not only need to set the necessary vision, but set the strategy for how to get there. A vision gives your team a target for committing itself to working harder than it might otherwise. Download complete article here[ view entry ] ( 438 views )
Dear Dr. Kiev,
Not long ago I spoke to you about the difficulties that I experienced at getting a summer internship. I took your advice to heart and continued to use perseverance to finally land an internship with Merrill Lynch. I will be working at Merrill’s downtown Toledo office which deals with Wealth Management. It is difficult for me to describe the excitement and joy that I have for my future. Your short story about a gentleman that tried to raise several billion for his fund, facing denial in 99 out of 100 people that he met, made me realize that my problems, especially as a student, are miniature in nature and that life is too short for anyone to deny or doubt their own abilities to accomplish anything they desire. For that I am grateful!
I have just one question for you. In your recent interviews about the rogue trader, Jerome Kerviel, you spoke about the importance of ensuring that each trader is a team player and that the funds goals are kept in check among the traders. In order to ensure that the fund is facing the right direction, the PM must have a system that limits the freedom of the trader. In other words, the trader has the right to put on specific trades or implement various techniques, but he/she must also be willing to share their mistakes and progress with the entire team. Steve Cohen makes it very clear that the success of SAC is the result of the team that he was able to create. Based on my research, you were the key figure that brought about the philosophy of Cohen’s firm, especially the yearly target setting approach. My question to you is this, if a trader is implementing various approaches that seize to work within a certain market environment and the PM forces him to limit his trading or stop all together, would such an action destroy the idea of a trader being disciplined to stick with his plan? I bring up this question because Richard Dennis (the farther of the Turtle traders) emphasized the importance of a trader following his system and rules even when things are going bad. The knowledge of the systems long term profitability brings about the discipline and belief in the approach and its abilities of turning out a profit.
As always Dr. Kiev, thank you very much for your time.
Sincerely,
Michael
Dr. Kiev:
Good question. It is a balancing act between the trader's methodology and discipline and the risk management of the positions within the context of the portfolio and the firm's capital deployment. It is an iterative and dynamic process and the best are the ones that can make this trade off as seamlessly as possible-this is based on art, experience,good luck and understanding management. Ari
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A recent interview with Gabe Wisdom on Business Talk Radio Network. click here to listen.
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Business News Network (Canada) interview of Ari Kiev on the subject of the Societe Generale Rogue Trader and the issue of screening such high risk behavior when building trading teams. Click here for the video
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