I Tried Running a Hedge Fund

  1. It was getting difficult for me to manage my job at IBM and also accommodate other aspects in my life which I wish to develop. Monitoring the market became more challenging and my updates would be delayed. Cutting corners was not the way to go. If I am being trusted with your money, it deserves the best treatment.
  2. By the time it was December, I only had 3 investors left. Most students had withdrawn their stake by this point. (I will elaborate on this in “Students and funds”below). It seemed futile to dedicate the same level of effort now, as I did when I had 70% more investors.
  1. Dilemmas and patience — Investing requires you to be unemotional about your money, but when it’s the money of your friends, it makes things a bit tricky. You can imagine, returning a loss to your personal friend circle would be a bit awkward. I had to build up my patience and tolerance for market swings and I’m glad that my investors were understanding.
  2. Trend spotting and business understanding — When you read business news and start observing the market more critically, something interesting begins to happen. All of a sudden you find that you have a “gut feeling” about certain things and that increases in accuracy over time. Your brain keeps getting better at spotting patterns in the market that you would have otherwise missed. Your understanding of the brands around you are run also increases drastically. I think that’s a super-valuable skill to have.
  3. Transparency and accountability — Posting updates every week and having to constantly explain results allowed me to create accountability for myself. This in turn helped to drive trust with the investors.
  4. Personalisation — I believe that connecting with your clients on a personal level is critical if you want to be successful in business. While that gets increasingly difficult as you scale, an element of personal touch should be maintained throughout. It feels good to know that you’re looked after.
  5. Students and funds — Lastly, this one is a critical factor in why I decided to wind down the fund. Hedge funds normally take money from people who have plenty of savings and surplus capital and….students do not. It is challenging for a student to be able to park their capital long term. This made it tricky when I was trying to use the principles of value and compound investing, which plays out over a longer timescale but deliver immense value (shout out to my man Warren B).

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