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www.tradersonline-mag.com 04.2014
Hedge Fund Series
What I Learned Working at a Hedge Fund – Part 2
In the world of investing, hedge funds have an interesting reputation. They are well-known for
producing vast riches and famous fund managers, but their actual operations are still cloaked in
secrecy. This mismatch gives rise to some obvious questions. How do they function How do
they make money How did their founders become so wealthy And, most importantly for traders
everywhere: Could you or me become one of those fabulously successful individuals, like George
Soros or Ray Dalio In this series of articles, hedge fund trader Bruce Bower will shed some light
on these issues and explain what individual traders can learn from all that.
» It’s About Making Money, Not Being Right
Often, you’ll hear people on CNBC or in the press talking
about their positions and their reasons for investing
or holding on to it. They can offer a million different
rationales, such as thinking that “the stock is cheap” or
that “it’s a great long-term story” or that it “a fabulous
growth stock”. Often times, they repeat those rationales
without paying attention to the performance of the stock
or how the markets are moving. It’s fine to have reasons
for investing – actually, you should! But there’s more to it
than that. You have to make money.
The problem comes when they wrap bad trading
practices around it. For instance, if a stock is cheap and
then falls, the same person will come on TV and say “well,
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