In a recent webinar, I sat with Maz Jadallah, founder/CEO of AlphaClone, a software provider and investment manager enabling what I call “piggybacking strategies” of top hedge funds.
We discussed some of the objections investors have to creating strategies involving replicating hedge funds. We also provided 5 tips to perform better using cloning strategies. It was a intriguing session with some great questions from the audience — make sure you sign up to this blog to be notified of our next event.
On Tradestreaming Radio, we’re interviewing lots of innovative entrepreneurs, investors, and researchers all trying to make investors better at what they do. Check out our archives. Subscribe on iTunes.
Wright is a university professor, prolific author, and a proponent of business-cycle investment philosophy. Along with WSJ columnist, Simon Constable, he’s written an incredible resource for investors.
We discuss:
Which economic indicators investors should be focused on
Which economic indicators make money, how much money, and how reliable they are
New indicators we haven’t heard of before
How technology is enabling new indicators to help investors to make better decisions
trends in investment book publishing to experiment with digital, freemium model and why he gives away his college textbooks for free
creating a broad swath of indicators to best understand all the nuances of the economy
Listen to the whole program
More resources
If you don’t see the player above, listen to the program here.
Join us this coming Monday May 9th @ 4pm ET for a free online discussion on the “5 Myths About Cloning Hedge Funds”.
We’ve been following hedge fund replication strategies (what I call piggybacking) since the early days of this blog and back to 2009 on NewRules. It’s not only a topic I like to analyze, but I’ve moved a lot of my own investment activity to leverage the power of cloning.
Readers of Tradestreaming will know that AlphaClone, a research platform that enables investors to backtest multiple cloned portfolios of the world’s best investors, has been helping to make piggybacking practical for all types of investors.
But investors I speak with still struggle with understanding the rigor in cloning — misconceptions about the strategy still abound.
So, I’ve invited Maz Jadallah, founder and CEO of AlphaClone, to address these issues. In an upcoming webinar, we’ll discuss:
the effects on performance of the timing delay in disclosure filing
the role of luck in clone portfolio performance
the importance of the absence of hedge fund short positions from disclosures;
Space is limited. Click here to reserve your seat now.
A lot of what it takes to become a good investor and a good manager of your money is just time. Think about people’s learning curve — in some sense we don’t really get an opportunity to become experts in money management unless we really put our minds to it. Most of us will only buy 2 or 3 or 4 homes during the course of our lives — we never really get the chance to become experts at that. So, there’s a good chance that we’re going to mess up.
Similarly, we only get to claim Social Security once, so in terms of when to claim Social Security, there’s a good chance, we’re going to mess up royally.
And similarly when it comes to investing, yeah, we’re going to get the chance to see a lot more bull and bear markets than we would opportunities to buy homes. Nonetheless, the chance to mess up is enormous in part because people have to cope with all this noise.
4 ways to accelerate your investment experience
Nothing beats experience like experience: you just have to be in it to win it. That means ensuring your take adequate precautions to maintain your ability to stay invested. The research shows it’s not about age, it’s about experience and time in the market.
Log your experiences: Keep a trading diary. Better yet, blog about what you’re doing, sharing your activities with others on Seeking Alpha or on StockTwits. You’ll get feedback from others — helping to expedite your learning and climbing the learning curve.
Plug into the tradestream: Use the Internet, the blogosphere, and twitter to identify top performers interested in sharing their knowledge. If you’re interested in making sure results are what they claim to be, follow top performers on Covestor who have agreed to have their performance audited.
I’m sending my kid to high school. Like James Altucher, I don’t know if I’ll send him to college. There is so much information readily available to investors, you can get a degree in hard knocks if your’re diligent and interested.
A new addition to Tradestreaming, the Tradestreaming Cascade is a highlight reel of some of the past week’s most interesting information. Much of this comes from my Twitter feed, @newrulesinvest
Research update: Activist Investing (The Activist Investor): More research into the value extracted by activist investors — this time looking at shareholder proposals and voting.
May 3rd poorest performing month in pre-election years (Stock Trader’s Alamanac): A hypothetical $10k investment in the DJIA for November-April would have compounded to over $500k (1986 – present) while May-October would have resulted in a $379 loss.
Curious to see what resources you use and find most useful for hedge fund cloning, tracking, piggybacking. Vote on the ones below or add your favorites.
A new addition to Tradestreaming, the Tradestreaming Cascade is a highlight reel of some of the past week’s most interesting information. Much of this comes from my Twitter feed, @newrulesinvest.
This transcript is of a conversation I had with Dr Joey Engelberg, Professor of Finance at the University of North Carolina’s Kenan-Flagler Business School (listen to the podcast). You can always subscribe to Tradestreaming Radio on iTunes.
In my book, Tradestreamingand on my website, I talk a lot about what I call collateral research. This is information that’s inherently non-financial in nature, but that investors are using to aid in their investment decisions.
One example I talk about in the book specifically is Amazon sales data. You can go onto Amazon.com, look up best selling computers, and you can get a list at that moment in time, updated hourly, of what’s selling well. So, if you were an investor in Apple, and Apple was introducing a new product to the market, that information, although it doesn’t say specific sales numbers, of what Apple itself is seeing through selling on Amazon, that information is at least important in the sense of how well a product may be received into the market.
Another area of concern for investors, of interest, is Google search data. Google recognizes that itself, and launched about two years ago on Google Finance something called Google domestic search trends, GDST. That’s a mouthful. What that is basically is Google itself is looking at a vertical search, something about the auto industry, unemployment, something where there are a series of search terms around a particular category, and then mapping them against the volume of other search queries.
So, you can get a feel for, qualitatively, how a certain search term or industry is trending vis a vis the rest of the search market. You can then overlay that information on top of an ETF or a mutual fund that may track that industry, and you can get a view for how well some of that data may, or may not influence future price movements.
Today’s guest on the podcast is Joey Engelberg, who studied this actually quite intensely. He’s a Professor of Finance at the University of North Carolina, the Kenan-Flagler Business School. He previously worked at the SEC, as a research specialist.
He recently produced a paper that caught my eye, called In Search of Attention. That basically looks at Google search data and tries to map it to future price movements. He actually did find a correlation that certain abnormal trends in search data can lead to abnormal returns in the stock market.
A new addition to Tradestreaming, the Tradestreaming Cascade is a highlight reel of some of the past week’s most interesting information. Much of this comes from my Twitter feed, @newrulesinvest.
How financial blogging landed me a book deal (New Rules of Investing): Blogging is hard to monetize. Here’s one way financial bloggers can begin to build businesses off their work.
Trades busted in new FocusShares ETFs (ETF Trends): Scottrade’s new ETF line, Focus Shares, had multiple trades busted. Some shares saw a 98% drop as Nasdaq canceled them.
Today’s episode is all about mutual funds, the product and the industry. As a guest on the program we have Theresa Hamacher, a co-author of the new book, The Fund Industry: How Your Money is Managed. She co-wrote the book along with Robert Pozen. Hamacher is currently the president at NICSA, a position that she’s held since March of 2008. For those of you who don’t know, NICSA is the National Investment Community Service Association, which bills itself as the leading provider of independent education and networking forums to professionals in the global investment management community.
Theresa had her background in investment management before that. She was the chief investment officer, CIO, for Pioneer, where she oversaw $15 billion in global equity in fixed income assets. Before that she was the CIO of Prudential Mutual Funds, where she supervised over $60 billion dollars in assets. Earlier in her career she was an equity fund manager. She began her career as a securities analyst.
Clearly the book is written from Hamacher’s extensive experience and perspective within the mutual fund industry. I do broaden the conversation to try to incorporate how the mutual fund industry is coping with new product innovation in the ETF, the exchange traded fund community.
I think talking about mutual funds is an interesting topic right now. They are a well designed product for a variety of situations. There seems to be an overriding mantra that sort of was born out of do it yourself investing that somehow mutual funds are inherently bad. I don’t see things that way. They have their time and their place. They’re particularly good products for scenarios where it doesn’t necessarily make sense to have an index product.
Exchange traded funds are obviously the fastest growing security, in terms of gaining new assets within the industry. It’s also interesting to me that mutual funds view exchange traded funds as competitors, and not necessarily as just new products, or innovative products in the industry.
I ask Hamacher a lot of these questions, but one thing that’s important to me is that when I speak to investors they say first thing, “Mutual funds are bad.” They have a connotation obviously, particularly ones that are sold with the sales load of being expensive, and that’s true. Continue reading “How your money is managed: the Mutual Fund industry up close (transcript)”
to Tradestreaming Radio.
, and a proponent of business-cycle investment philosophy. Along with WSJ columnist, Simon Constable, he’s written an 
just came out. Looking forward to reading it.
