Look For Judgement

About a week back I was pitched an algo trading scheme that was offering a mostly 12%+ return monthly. There were the past performance figures, with even the odd slip-up.

At the point I was put off by the fact that a bot would have access to by trading account. It seemed a risk not worth taking.

Moreover, I had not the experience to know what are normal returns from futures trading.

On Saturday last, I had lunch with a friend who owns a stock broking firm. And he was willing to offer a guaranteed 20% return per year only. Anything more in his opinion would be undoable/too risky and likely to bankrupt any broking company.However his was manual trading, not algorithmic trading.

So either the algo chaps were outright cheats or living in some or other technology ivory tower as the academics in the movie below.

In money matters, judgement is everything. Perceiving that something might have changed and moving to safety and accepting ignorance and taking defensive action is pretty important. Its absolutely essential in your money managers.

Even Nobel Laureates and well respected academics who teach financial modelling can be poor money managers.