Beauty Before Brains in CTA Selection

We’re big fans of the short research pieces periodically released by dating website OK Cupid (in fact, it was the subject of our very first blog post). Armed with a huge pool of data from online singles in search of love, they often have fascinating, and occasionally surprising insights into human behavior and courtship. Based on user behavior, they’ve compiled evidence of a fairly basic aspect of courtship – more attractive women tend to receive more messages from male users than less attractive women:

When it comes down to actually choosing targets, men choose the modelesque. Someone like roomtodance above gets nearly 5 times as many messages as a typical woman and 28 times as many messages as a woman at the low end of our curve. Site-wide, two-thirds of male messages go to the best-looking third of women. So basically, guys are fighting each other 2-for-1 for the absolute best-rated females, while plenty of potentially charming, even cute, girls go unwritten.

The medical term for this is male pattern madness.

Ok, so this isn’t really that surprising. But it caught our eye because it is remarkably familiar. It reminds us of the way too many people approach investment – pining after the most attractive programs, and basing their investment decisions on what looks the best right now. In other words, chasing performance.

We cannot emphasize enough… this is a recipe for disaster. Those programs might look beautiful right now, but that beauty can (and often does) fade very quickly when you hit a rough patch (Disclaimer: past performance is not necessarily indicative of future results). If you’re basing your decisions on superficial information – like the most recent return information – you probably aren’t getting in for the right reasons.

Sadly, we see this all too often. In taking a closer look at the fall of John W. Henry recently (and we’ll have more on that next week), we noticed that the firm raked in huge assets on the back of some years of great performance, only to see those assets flee after hitting a rough patch. What happened next? Naturally, once the majority of the cash had fled, the manager bounced back (although he struggled again after that).

Finding a mate is a lot like picking the right CTA programs for your portfolio. You should spend plenty of time doing your research and getting to know one another to make sure that you’re compatible for the long term. Otherwise you might end not just heartbroken, but broke, as well.

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Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.

Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.

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