Dwindling opportunities in the market?
I have been reading Market Wizards interviews and it seems like with improvements in market data and professional traders across banks and hedgefunds squeezing out casual investors, hedgefunds have been struggling to find those same returns that they used to. When you discover a strategy or opportunity that works in a market, it's only a matter of time before that opportunity gets traded away as the market becomes more and more efficient with your trading.
Are potentially lucrative opportunities in the market still out there? Do markets constantly need people to reinforce efficiency, hence creating more or less permanent roles and opportunities(i.e. if traders are not around to trade a strategy/pattern/arbitrage, do those opportunities return)?
If there is anybody that can answer your question they are not going to
the way I think about it, as long as those charts are moving up and down, there are ways to make money.
But yes its harder and harder, and the effect of more people looking at something driving away profit opportunities does not reverse when those people leave because the innovations stay, but when they leave liquidity dries up which makes it harder still.
I'm partially of the opinion that is a shitty excuse for average fund managers who can't make money when asset prices don't keep rising. People always talk about "hedge funds" like they're some magical class of brilliant investors - they're not. Like any large group -- and there are thousands of hedge funds with at least several hundred million of AUM -- some of them are great, most of them are mediocre/average, and some of them are terrible. The top guys are the ones who have proven themselves over the past 10-15 years, pre-crisis and post. Guys like Brevan Howard, Greenlight, Third Point, RenTech, etc... have done this.
I'm not a big believer in the trading : poker analogy, but in a certain way, hedge fund performance over time is like poker. Sure, there's some luck to it and a beta element as well, but there's a reason why some guys have consistently done well, year in, year out, just like there's a reason a lot of pros consistently make it deep in the WSOP despite the lrandom/luck factor.
Theres opportunity each and every day, just have to know how to look for it
The market wizards book covered a two decade era of massively expansive followed by abruptly declining commodity prices, hence someone like Ed Seykota could simply buy 20 day breakouts and compound a 5k account into 15 million over a decade with multiple redemptions along the way.
I take it your trading is going well.
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