Archives of “venture capital” tag

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Is this the next ‘edge’ for traders?

  
  Education
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It took Peter Borden a while to come around to modafinil. He never takes prescription drugs. He doesn’t drink to excess. He’s into acupuncture and alternative medicine. But he was working two jobs—by day, he does quantitative analysis and project management for a venture-capital-backed B2B start-up; by night, he’s developing a proprietary high-­frequency trading system for a Wall Street start-up of his own—and what he needed was more time to work. 

So a few months ago, Borden ordered a three-week supply by mail. (“It was a piece of cake,” he says.) He popped his first pill—“the maximum suggested dose”—as soon as the package arrived, and within a few hours he started feeling a pleasant fuzziness. “Not fuzzy-headed,” he says, “but crisp. A crisp softness to it.” Soon he was experiencing a level of concentration he’d never imagined. “My senses sort of shifted to the visual, and my auditory sense went down. Sounds didn’t even register. It was like walking around on a winter day when it just snowed. It was very easy to stay visually focused.” 

Next came a head rush. “I sensed it was blood actually moving to the optic nerve. Your eyes start to feel very sort of engorged, and your awareness comes to the front of your face, which is kind of a freaky sensation. I would describe it as being very much like Adderall, but without the speediness.”  (more…)

Walker, Wave Theory for Alternative Investments

  
  Education
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Metaphors are tricky little beasts. Used well, they can make prose vivid; used poorly, they can sometimes become intrusive clichés. In the case of Stephen Todd Walker’s Wave Theory for Alternative Investments: Riding the Wave with Hedge Funds, Commodities, and Venture Capital (McGraw-Hill, 2011) the reader often yearns to move inland and be done with waves, surfers, and forced quotations. (Among the most egregious offenders in the quotation department is [on p. 309] the following: “In Herman Melville’s Moby Dick, the author explained that ‘[t]he sea was as a crucible of molten gold, that bubblingly leaps with light and heat.’ One can plainly see waves with the commodity gold.” Poor Melville and his “explanation.”)

Although the author pays lip service to Elliott wave theory, his waves are more generic. As he writes, “Wave theory is simply the belief that all securities move in waves (patterns, cycles, or trends).” (p. 3) Few people today would dispute this belief, so we can quickly dispense with any further talk about waves and move directly to the substance of the book—investing in venture capital, commodities, and hedge funds.

The most informative part of the book focuses on venture capital, with which the author was involved in the 1990s when he worked at Alex. Brown. He traces the history of venture capital, highlights some of the principal players, assesses the performance of venture capital, and discusses advantages and disadvantages for investors. One of the disadvantages is the phenomenon of capital calls. A client commits a certain amount of money, say $1 million. But “few funds take all the money up front today. As the venture fund identifies new opportunities, they will call on their investors to put more money into the fund…. Because these calls are random and over long periods (years), it can be burdensome to an investor. Should the investor (for whatever reason) decide not to invest, there are normally severe penalties.” (p. 172) (more…)

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