Tuesday, November 15, 2005
I don’t want to talk about the exact subject matter of the class in case anyone who takes it next year is reading. Last week my partner was running the trading while I ran the spreadsheet. He is pretty conservative when trading, and we wound up with only about half the gains of the leaders. This week, though, he was in NYC for interviews and so I was left to trade our account myself, and I wanted to finish in first. Well, it turns out that a conservative diversification strategy like my partner pursued would have been a good strategy, as I got aggressive after falling behind early and got heavy into several deals that eventually exploded. Perhaps our name should have been Short Term Capital Management after all, because I grew our portfolio roughly 3x and then ended up at -6x. Yes, as in liquidation of the positions and negative equity.