On You Tube you can watch a British series called Hedge Fund Lions Den in which two firms try to gain money from asset managers. Institutional Asset Managers are companies who invest money for others, but they specialize in either very wealthy clients or pension funds. The advantage of pension funds is every pay day, people are contributing to their pensions and pension funds have a duty to invest the dollars for the pensioners. When many people deposit money into accounts, the asset managers go to the pension fund managers and ask for a share of the money to invest in different asset classes. When a pension fund is large it needs to diversify its funds into asset classes – stocks, bonds, futures, real estate, and any other asset which can provide a consistent return. In the case of trading futures, there are as many ideas as there are people and to a degree under the correct conditions they all can work – the issue the asset managers is which conditions and when do the theories translate into consistent returns. If you are small, the trades have to be very focused, the greater the dollar the more the fund looks like an index fund.

In the series – two individuals who believe they have the next best thing are trying to gain funds from the three asset managers. Then all the stresses of trying to be successful and being successful is the next stage. The series is all those elements of how money is allocated to managers and there should not be a real surprise. In the realm of alternative futures trading – how simple is what you do being described? How comfortable are the asset managers with the individuals? do you want to work with them? as well as their track record and why they believe their system is the one for the asset managers.

Linking to dividend paying stocks, if there is a tradable market there will be players. With stocks we know that buying profitable companies is less risk than buying non profitable companies because the highs and lows of the companies will be different. Often times having an emphasis on capital retention leads to capital gains. If you focus on capital gains, you may miss the easy capital gains. As a dividend stock buyer, this is what you want the easy capital gains as well as dividend for long term wealth creation. Learn from the hedge fund players, but unless you are in their ballpark concentrate on slow but steady.

There are more questions than answers, till the next time – to raising questions.