What is a spectacular return
Trader Mike had this interesting poll asking what would you consider as Spectacular return.
It depends on your definition of spectacular. 57% of people think 50% or less return is spectacular. This probably is more a reflection of the kind of readership his blog attracts. If you see the databases of CTA's, hedge funds, early track record of some outstanding funds or the Trader Monthly 100, you will see some really spectacular return in some years.
The trick to spectacular return is stock or instrument selection, longer holding time horizons, concentration, and ability to take higher risk on some ideas. Market conditions and luck also helps sometime.
Dan Zanger is one of the celebrated example of speculator who earned spectacular returns some years back and continues to do well. You can learn a lot from his methodology.
As a follow-up to the previous post about percentage gains I made up the following poll: (Edit: to be clear, I'm not talking about annualized gains over multiple years. Just a one-time, one year return.)
Second Edit: Apparently the highest level on the poll, 200% is just mediocre to some. My bad. Feel free to leave a comment if your 'spectacular' level is above 200%.
It depends on your definition of spectacular. 57% of people think 50% or less return is spectacular. This probably is more a reflection of the kind of readership his blog attracts. If you see the databases of CTA's, hedge funds, early track record of some outstanding funds or the Trader Monthly 100, you will see some really spectacular return in some years.
The trick to spectacular return is stock or instrument selection, longer holding time horizons, concentration, and ability to take higher risk on some ideas. Market conditions and luck also helps sometime.
Dan Zanger is one of the celebrated example of speculator who earned spectacular returns some years back and continues to do well. You can learn a lot from his methodology.
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5 comments:
You mention the Trader Monthly 100... do they show percentage returns? As I recall, all they do is estimate dollar amounts paid to the traders. They don't tell us how much money they were trading with. So the actual percentage gain is a mystery.
See the returns of some of the Market Wizards. They are documented. Look at Mark Minervini site. http://www.quantechresearchgroup.com/markm.html
Also look at early year returns of Mark Boucher, they are publicly documented. Look at the book The Best: TradingMarkets.com Conversations With Top Traders (Hardcover) by Kevin N Marder which documents returns of some of the traders.
Forbes many times carries annual feature on top hedge fund managers and gives annual returns of some of them.
No one is expecting spectacular returns every year, but most who are voting 50% or less have no idea of what is poosible. There are mutual funds which hit those marks in some years. Look at 2003-2004 performance of some of the mutual funds.
http://moneycentral.msn.com/investor/finder/deluxefundscreen.aspx?query=Hot%2c+No-Load+Funds
There are 26 funds for this year with 73% plus returns.
don't get me wrong, I agree with you that 505 isn't spectacular -- and I've seen some of the sources you mention. All I'm saying is that the Trader Monthly list gives you no idea of what percentage gains those traders are making.
Also, I'm sure it's real hard to get huge percentage gains when you're starting with hundreds of millions, if not billions. That's why I've always said that I wish Trader Monthly would clue us in on just what the actual percentage gains were.
The Traders Monthly data is indicative not based on actual reporting. It is lot of guestimates.
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