Make sure you do thorough due diligence before investing in a hedge fund, trading pool or managed account. Remember, people thought Bernie Madoff was a good guy with a family and all that stuff too. Madoff was also big on charity, just fyi.
It's important to ask the people that are trading your money what their risk parameters are. Are they going to be day trading? Swing trading? Using derivatives?
Find out if they have ever had a fund before and ask how they did with it. While this is supposed to be revealed in the offering documents, double check.
Ask for performance, and ask for a FULL audit of what the managers have done in their personal accounts, not just thrown up as hypothetical results on blogs, websites and the like. Hypothetical don't pay the bills, unless you have a hypothetical mortgage and hypothetical car payments! you will be startled, amazed and shocked at the true performance of the cretins that are really scam artists. Be sure to check draw downs, margin calls and the like. If the fund takes a deep draw down, how will the managers bail YOU out?
Finally, check how much skin (their personal money) ALL the people running your money have in the game (the fund). If they don't have skin in the game, ask why not? If they don't have any, are you supporting these people? And if they do have money but choose no to put it all in, ask why? If the fund is so great why aren't they all in? Are they just taking a shot with your money? Why are they now opening a fund? Have they always ran a fund or is it something just to raise some quick cash at your expense? Where is your money being traded? Are you paying higher commissions just so the fund mangers can get a kickback from the broker they are using? That's devious and nefarious.
DO YOUR DUE DILIGENCE AND DONT BECOME ANOTHER VICTIM OF WHAT SEEMS TOO GOOD TO BE TRUE!
tiny
No comments:
Post a Comment