How to succeed in the financial industry (at the expense of others) | by David L | April 2022

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Here is an honest truth. You are not in this business to sell information, facts or logic. You’re in this business to sell hopes, dreams, and to make people feel smart and superior.

Do you think people will bother to look at your financial models? Don’t worry, they don’t care. If they care, they’re not for you. You can’t craft them anyway – you’re just a vendor. Why work hard to attribute stats to intelligence when you can just max out your charisma?

Remember how a fund makes money. This is either through market outperformance or asset management fees. The first one is too difficult because it requires you to surpass the mathematical quants of Renassaince Technologies and all the other doctorates. economist around the world. The logical choice is to opt for the second.

Think investors are interested in your math skills? No, they claim to care, but most of them only care about the money you’re going to make for them anyway.

You don’t need reality to sell them the fund, you just need to give them the impression that you can make them more money than any other business.

Consider this following conversation:

“Hey, $NFLX is now 69% of its peak! Its RSI is at 5 while the short SMA is now below 4.20 standard deviations from its lower BBands! The VIX contango is also producing a signal indicating that it’s over 99% correlation! Our models tell us that we have an 87% hit rate if we buy once $NFLX leaves the Ichimoku clouds!”

“What the fuck are you talking about?”

“Netflix. Cheap. Buy now. Opportunity of a lifetime.”

“Why?”

“I have 170 IQ. Give me $4200 and you make $69,000 in 2 weeks.

“Sold.’

No one will invest anything in you if they know they are not getting anything from you. Logically, practically, and in reality, you know they can’t get more out of you than anyone else if you all play this game legitimately – finance is too dependent on many different variables that are beyond your control. control.

However, you can control a few things: 1) the amount you will distribute to your investors, 2) the number of investors you can convince to invest in your fund.

Here’s how you’ll do it:

  1. Promise the first one that you will earn money for him.
  2. Promise the second that you will make him money.
  3. Pay the first with part of the money you receive from the second.
  4. Show the second guy how much you earned for the first.
  5. Have the first guy get the third, fourth, nth guy on the carousel.
  6. As long as new faces arrive, the party continues.

Congratulations, you have just discovered what a Ponzi scheme does. Be careful, this is illegal and you will suffer legal consequences. As long as you don’t get caught and no one finds out, you should be fine.

Just try to be more creative. Those who are not so creative were already in prison.

Flattery sells. Nobody wants to give money to someone who constantly tells them they’re wrong, questions their decision, and offers obscure spreadsheets to show they’re smarter than their clients. There’s a market demand for feeling good – and you’re here to meet it.

Remember, you’re not there to charge them to make money. You’re here to make them pay for telling them how smart they are. How much you win or lose for them doesn’t really matter. It’s just the price they pay for a yes-man.

Don’t try to be smart and challenge their opinions or consult them on any questionable decisions they’re going to make. When you’re around them, your first job is to make them feel like they’re at least 30 IQ points ahead of their true IQ.

Sometimes perception is not enough to be sold. People want real results because the results speak for themselves. That’s how they’ll tell if you’re worth your salt.

Except you can choose your results, and no one can really discover your failures unless they’ve spent months digging into them.

You know investors love past performance because the better you perform, the smarter you look in their eyes. But unless you’re really good, you know you can’t always make the right decisions.

What you should do is always show how much you won in the last trade, and only a genius like you could have seen that coming. When you start losing money, quietly hide them in a corner and pretend like it never happened. When pressed, feign amnesia.

The easiest way to do this is to open a long position and a short position in a highly volatile security in two different accounts. When it goes up or down it doesn’t really matter because you don’t lose or win any money either way.

Then show your investor the winning account and write them a 2000-word report on the genius it takes to see it coming. Once everyone is convinced of your genius, delete the account that just made you lose money and pretend it never existed.

Convince them that you possess sorcery to print money. Of course, if something is understandable, it doesn’t look like witchcraft. Your best bet is to over-complicate things and assure everyone that you’re using something new that no ordinary plebs could ever think of before.

For best results, include a deep neural framework in your investment strategy, add more than 5 different colors, and draw more than 10 different lines in your charts.

For the killing blow, show them an incredibly overstaffed backtest that proved your strategy made 69420% over the last 10 years in the training environment, then show them the names of every person who made money. money invested in this strategy.

Remember the part where investors loved being told they were smart? They’re not stupid even if they don’t understand (in all honesty, you don’t even understand either). All they had to do was listen to you and put their money into your strategy – along with all the smart guys who had ever made money listening to you!

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