Hedge Fund/Family Office Consulting Job

An example of my short corporate careerQUIZ: You are called in to interview for a six-figure consulting job for a family office.   The family wants to establish an investment policy and procedure for investing.   You are asked whether you would recommend investing in IPOs or other hedge funds.   You reply that before recommending any asset class you would first determine:__________________________?   Also, as a “value” (redundant) investor you would seek to buy from _______________ sellers. In case you need a hint, Ben Graham would have given you the answer in The Intelligent Investor.

One of the family members plops two annotated charts: 1 shows a reverse head and shoulders pattern on pork bellies and chart 2 shows blood spatter on the right of the chart.   Which one has more predictive value as to where the market is headed?

Please answer in a few words–two or three–but no more than a sentence. GOOD LUCK!

9 responses to “Hedge Fund/Family Office Consulting Job

  1. 1. Intrinsic Value
    2. Panic
    3. Same

    • Ok, I can’t argue against intrinsic value. I didn’t phrase the question well. If you had to develop a search strategy to find investments, then what would you do first when examining different asset classes? Think of baseball.

  2. Expectations and Horizon….. irrational

    • Ok, good. What are your expectations and time horizons. But if I said to you that I will invest your money just in IPOs based on IPO returns and your long time horizon what would you FIRST need to know? If I asked you if you ONLY could invest in either BONDS or STOCKS over a thirty-year horizon which would you choose and why?

      What would the guy in Money Ball do?

  3. 1) Margin of Safety
    2) Forced
    3) Predictive value does not exist in charts

  4. Family Office Risk Profile etc
    Price Insensitive


    Before investing in any asset class, check out the base rates for that asset. IPOs have lower returns long-term than the general market. Yes, there are exceptions like Google, but you are buying from knowledgeable sellers.

    You can also see base rates for hedge funds which are lower than an index fund. Why? High fees.

    Use statistics to fish where you have an edge and avoid where the odds are stacked against you.

    Buying index deletions–based on base rates–is a postive strategy, for example.

  6. Safety, desperate sellers, none

    • Bingo. I can’t complain about safety. I was looking for BASE RATES. What is the history of the particulat asset class.

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