Who Makes Money in Wall Street and How

It is interesting to see the diversity of methods aimed at generating income in the commercial scene. Whether it is a mathematical trading or a worthwhile investment, there are numerous methods out there. This publication aims to review some of the most common methods used in each area, and are the most well known winners.

What it is: After Black and Scholes found the formula to evaluate an option, it became clear that mathematical trading will become a major influence on the scene Financial management. What is now known as Financial Engineering has become very popular among college students. Mathematical sophistication is constantly increasing, and people working in this industry are known as quants. The most famous quant is probably Emanuel Derman, who also published a book entitled "My life as a quantity: reflections on physics and finance". These days, most financial companies hire quants.

Founded by David E. Shaw. Having a Ph.D. in Computer Science could not have impaired Shaw. He created a fortune by building automated trading systems that explored anomalies in the stock market. Fortune magazine referred to it as "King Quant." The company manages approximately $ 29 billion in aggregate capital.

Employment opportunities in D. E. Shaw are known to be extremely competitive. A notable past worker at D.E Shaw is Jeff Bezos, founder of Amazon. LTCM

The Long Term Capital Market was a hedge fund founded in 1994 by John Meriwether. Myron Scholes and Robert Merton had their picture, two Nobel Prize winners! At its peak, it made about 40% return for its investors. After being heavily leveraged, he failed.

The LTCM example teaches that, no matter how clever you are, there are some things that are out of our reach. A good book on LTCM is "When Genius failed: the rise and fall of long-term capital management"

Speculating

What it is: speculating is simply Have a Philosophy about the market and act accordingly.

Probably the best speculator of all time. Soros is known for his concept of reflexivity, a concept in which you can read more in his book, The Alchemy of Finance: Reading the Mind of the Market

Whether the theory is true or not, its record proves this . On Black Wednesday (September 16, 1992), Soros came to fame when he sold more than $ 10 billion in pounds, which ultimately led the Bank of England to devalue its currency. He earned an estimate of $ 1.1

Although not more active, Soros is the prototype of a speculator.

Although he has failed twice, Niederhoffer is still considered a great speculator. In 1996, MAR magazine ranked him as the number one hedge fund manager in the world. Mixing his philosophical ideas about the market with statistical methods, his new Matador Fund would have returned 56.2% in 2005!

Niderhoffer also wrote several books describing his philosophy in relation to the market. One is, practical speculation.

What is this: trend followers believe that the market displays trends, up or down. They strive to find systems to identify the trend and "put it together" for financial gain.

John Henry

Manages more than $ 2 billion in client assets. He was born to an agricultural family and adores baseball since the time he was 9 years old. He described himself as having average intelligence … and attended community colleges and attended numerous evening courses, but never received his university degree. He also owns the Boston Red Sox.

Bill Dunn manages Dunn Capital Management, which has a minimum initial investment of $ 10 million to enter. He is considered a legend among trend traders.

What is this: Buy stocks that appear under priced by some forms of fundamental analysis and maintaining them. Warren Buffet

Not only is Warren Buffet the most outstanding investor, he also Is the most outstanding investor in the world! It was ranked by Forbes as the third richest person in the world as of April 2007, with an estimated net present value of $ 52 billion.

Least known to Warren Buffet, Joel Greenblat is president of The St. Lawrence Seaway Corporation and a value investment guru. He advocates buying "cheap and good companies."

He achieved annual returns on the Gotham Capital hedge fund of more than 50% per year for 10 years, from 1985 to 1995, before closing the fund and returning the money from its investors!



Source by Daniel Nathan

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