Gentlemen and Ladies:
I would like to respond to people who claim that Collective2 needs to police people’s online identities.
First, let me say that I appreciate that you care enough about C2 to spend time sharing your opinion.
However, I fundamentally disagree with you.
Your position is that Collective2 needs to spend time verifying people’s identities. You call people that start trading strategies under brand new identities “scammers.” You propose that Collective2 should spend effort and resources to police this and stop it.
I disagree for several reasons.
1) Philosophical: Online photos don’t matter. Track records matter.
The core philosophical underpinning of Collective2 is that the world of finance and investment management has for too long been the province of credentialed elites. Until C2 (and other alternative platforms), it was impossible to break into the world of finance unless you were born in the right country (U.S. or U.K.), spoke the right language (English), went to the right schools (Ivy League), and had the right career trajectory (business school, a few years at Goldman or a private equity firm).
My philosophy is: that’s all nonsense. In fact, your ability to trade is completely orthogonal to your educational pedigree. I’ve written a longer blog post about this here: “Why Only Sorbonne-Educated, Literature Ph.D.s Should Cut Your Hair.”
But you don’t need to read that post to glean my main point: The only thing that matters when it comes to trading is… your freaking trading results. That’s it. Your track record matters. Nothing else does.
So to all you people who are bothered by knuckleheads who start a new trading strategy under a new identity (and yes, they are knuckleheads), I ask you: Why do you care? Why would you give two seconds of your time to examine a trading strategy without a substantial track record behind it?
I say: let knuckleheads start again under a new “identity.” So what? No investor is going to follow a trading strategy based on the Trade Leader’s “alias” or his photograph. The only thing that matters is his or her track record.
If a Trade Leader wants to start fresh and create a brand new strategy, using a new idea or analytic or mechanism, so be it. But he still needs to actually build a good track record with that new methodology before anyone should care about that Leader and his strategy.
2) Logistical: It’s technically difficult, and imperfect anyway.
Even if I agreed that it is somehow Collective2’s job to make sure people don’t create a new online identity, that task is difficult, expensive, and ultimately imperfect. If Google, Facebook, and Twitter have a hard time doing it, how is Collective2 going to fare?
Yes, yes, it’s possible to take steps to make it harder for people to create a new online persona. But every step taken is surmountable by a countermeasure. Ultimately, it would be an arms race of steps taken, and counter-steps taken… and all for what?
For an “problem” I do not think is a problem.
3) Welcome to the real world.
The “problem” identified here exists in different forms everywhere in the world of finance.
Hedge funds shut down, and the same people start new ones. Yes, yes, the principals do need to disclose their prior efforts. But I’m sure many of you know that, often, the principals of finance firms are just the “face” of the firm – that glad-handers that meet with investors, shake hands, smile, and get them to wire the money. The actual talent at trading or deal-making exists at a lower, and typically undisclosed, level.
Mutual funds and ETFs shut down failed efforts, and then shift their assets into “new” funds or ETFs.
In other words, the “problem” of someone abandoning one failed effort and then beginning a new effort, with a new strategy or idea, exists everywhere.
And my opinion is that it’s not really a problem, anyway. Again, so what? Are you going to invest in a hedge fund with 0 days of track record? Of course not. You’re going to wait to see if the guy starting a brand new fund with a brand new idea can actually perform.
I’ve resisted the desire to speak out about this, because I just don’t want to get into a forum argument. They are never productive.
In conclusion, my advice is: don’t follow trading strategies without a substantial track record. Other than that, I don’t think anyone really should care “who” is behind a trading strategy, and whether his online persona matches his physical appearance or name.
The only thing that matters is the go-forward track record that a Trade Leader compiles here on Collective2.