Owen Li, the founder of Canarsie Capital in New York, said Tuesday he had lost all but $200,000 of the firm’s capital—down from the roughly $100 million it ran as of late March. He bet clients money in options. So I guess if you turn your money over to one of these people, you think they can make a lot of money, or a lot more than you can because it’s their job, it’s their bread and mortar. But in reality, very few people can beat the s&p 500 so why fight against it? Paying high fees and risk losing everything?
Whatever you decide, invest on your own, go with an advisor, or invest in a hedge fund. These are the core question you or your advisor should be able to answer. I’ll include my answers with the question.
How do you manage risk?
I diversify. The money that I don’t need, or can afford to miss will go in 401k, Roth IRA so I can take principle out without penalty, always have cash on hand.
How much leverage do you use? What are the limits?
I’ll go with the standard mortgage requirement.
Debt to income ratio of 43%
Right now I’m a little bit above that. It would allows me to assess to see if I can afford another property on leverage.
What parameters are in place to supersede a portfolio manager’s decisions?
I don’t use one. But if I do use an advisor. I’ll go with a low risk index fund to cut to the chase.
Do you have a general counsel for insider information?
We shouldn’t have insider information. It’s illegal. But apparently Mark Cuban says it’s hard to regulate China insider trading. It’s part of the communist regime and the whole corrupted system works.
Is there an investment board? How does a position get into the portfolio?
I’m just going to research one company at a time. There are some criteria that I’d look at like PE, cash on hand, book value, market trend, long term prospect, etc. No approval necessary, it’s nice to make your own decision.
What quantitative measures of risk do you look at?
Here is an article about the QM of Risk