Bernie Madoff promised a 12% return and had 36 Billion under management. He couldn't deliver on his promises.

Most investors cannot consistently outperform the indexes.

deaddog 

Bernie Madoff promised a 12% return and had 36 Billion under management. He couldn't deliver on his promises. Most investors cannot consistently outperform the indexes.

I'd throw in "most billion$-scale investors".
(Maybe just because I'd prefer outperforming them myself )

edit: but then again, I'm trading not investing.

deaddog 

Bernie Madoff promised a 12% return and had 36 Billion under management. He couldn't deliver on his promises. Most investors cannot consistently outperform the indexes.

I wonder how he'd do with just a couple million. I could imagine 36 billion to be harder to throw around.

Itchymoku 

I wonder how he'd do with just a couple million. I could imagine 36 billion to be harder to throw around.

Just saying that promising a 12% return will get you a lot of investors. The pros don't seem to be able to do it consistently yet a lot of people are drawn to trading with unrealistic expectations.

deaddog 

Just saying that promising a 12% return will get you a lot of investors. The pros don't seem to be able to do it consistently yet a lot of people are drawn to trading with unrealistic expectations.

Well, most funds nowadays know that the real money is made charging fees on institutional money where typical subscriptions tend to be in excess of $10 million. Therefore, most professional money managers cater for the institutional crowd which means returns need to be achieved at the lowest volatility you can accomplish. No institutional allocator wants to allocate to the next Richard Dennis.

Also, excessive volatility makes investors nervous and funds do their utmost to limit volatility to maintain their AUM. It is very difficult to get clients to invest, or even re-invest, so funds need to ensure that their investors are happy if they wish to remain in business.

However, trading your own money, averaging more than 12% p.a. should be possible to the best traders. Druckenmiller averaged 30% p.a. in his fund after fees and expenses. Unfortunately, most shoot for much higher returns and their accounts get blown up long before they ever have a chance to get there.

grausch 

However, trading your own money, averaging more than 12% p.a. should be possible to the best traders.

You said "should be possible". Are you experiencing those type of returns?

I didn't make that this year (just under) but then I'm not one of the best traders.

deaddog 

You said "should be possible". Are you experiencing those type of returns?

I was slightly negative in both 2014 and 2015 with the losses being larger than I'd like, but small enough not to do serious damage to my account. Should we start getting some decent trends, then I am already well positioned to make those losses back and then some. In good years, I have banked more than 100%, but those type of years don't come along that often.

deaddog 

I didn't make that this year (just under) but then I'm not one of the best traders.

You probably know that I meant annual returns over a sufficient number of years. Achieving 12% every year was the dream Madoff sold. In any case, when I talk of the best traders, I generally talk of those who can really hit it out of the park, whereas I suspect you would think of those achieving the best return vs drawdown (or risk) numbers.

grausch 

I suspect you would think of those achieving the best return vs drawdown (or risk) numbers.

As my lifestyle depends on my trading returns I prefer consistency to wild swings. Number 0ne priority is capital preservation. Took me a long time to realize that you only have to win once in a while to make a decent living as long as you keep the losses small.