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Collective2's Official Position on Online "Identity" at C2


#1

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.

Summary

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.

-Matthew


#2

100% agree with it.

What about “redirect” money under C2 umbrella to more conservative strategies and allow C2 survive another market crash without hiking fees again?


#3

I agree. Don’t subscribe to scammers strategies and with no demand they will go away.

Investors just need to admit that 40-50% annually is a great real world return, and if the equity shows higher return now than it will get back to that 40-50% level sooner or later causing losses. This rule automatically excludes scammers from the list of potential subscriptions.


#4

Actually couldn’t agree with THIS more. lol. Few people’s opinions are changed, ever. It’s just argument and counter-argument ad nauseam.

I do disagree with one thing though. Matthew said track records are the only thing that matters. Indeed they are. But your prior track records/systems matter just as much as your current one.

If a developer had a good system for a year with a lot of subscribers, then had a big loss and tripled down on it and blew up everyone’s account, I would like to know that. If he/she comes back under a new name and has another good 6-12 month run, a lot of people would invest, not knowing he/she blew up dozens of accounts in the past. That’s the main issue for me.

But at the end of the day a fool and his money are soon parted. I guess this just accelerates the parting in my opinion.


#5

Only a court can recognize a person as a fraud. You do not have this right. You can be held accountable for libel.


#6

I agree with you 100%. You can not delete past track records. Let them stay. It will be fair to future subscribers.


#7

Delete all the track records. make it simple. What is the point to keep garbage if someone can change identity? Keeping garbage and manage it cost our money in fees.


#8

This.

Unfortunately most trade leaders are not willing to stick around a long time and develop a long-track record if they don’t get subscribers. And subscribers are always looking for the next hot-hand so they don’t want to wait for anyone to trade for 6 months to prove themselves.

If someone has blown up in the past it is absolutely critical information that potential subscribers should know about rather than finding out the hard way


#9

Matthew if you really believe this then you should not allow anyone to subscribe to any system before it has “a substantial track record behind it”. Problem solved.

I bet C2 is making a lot of money from people that subscribe to systems without a substantial record. It seems a hypocritical to suggest this isn’t a problem because no one should be subscribing to someone who starts up a new/unproven system when C2 is profiting from the very behavior that you say should not be occurring.


#10

Why all customers who need confirmation that developer of strategy with 100%+ return has a clear background check, use following rule:

strategy to invest = min 6-months TOS or (min 1-year C2 track record and min 1 market crash)

This will solve most of your problems and reduce your fees by saving C2 cost of keeping and managing garbage (past strategies).


#11

Pete -

There are many reasons why people might choose to follow a new strategy, despite its being new. C2 allows people to make choices based on their own circumstances.


#12

Sorry for posting again but in re-reading your first point I am little bit mystified. I don’t think anyone said that we need to know the credentials or photograph of trade leaders - all we said is that we want to prevent someone from “re-inventing” themselves to hide from their past trace record.

In the title to your first point you yourself say “track records matter”, yet you are allowing trade leaders to hide from their previous track records.

Indeed - so let’s no let someone escape from their track record by changing identities.
If someone went crazy in the past and broke all the rules that they laid out for their system why isn’t that information something that should be made available to any potential future subscribers for any system from that same person?


#13

Matthew, I’m okay with your take on the above. Here is an approach which may help with slightly discouraging the less scrupulous developers while encouraging the developers who wish to build long track records.
Have a tiered listing fee schedule based on how much a developer charges to subscribe to their system.
Charge 40% listing fee based on the developers fee for subscription. I.e. A system developer wants to charge $100 fee to subscribe to his system- the developer pays $40 listing fee. Say he wants $250 a sub- he pays $100 listing fee. This approach would be more fair to the more conservative longer track record inspired developers who need more time to build that track record. The aggressive leveraged systems that get the sometimes high short term results will not be that impacted. The get rich quick developers often attract the get rich quick subs anyway. They are cut from the same cloth and they will pay more for their desired results and C2 will get higher fees to boot. The conservative developers who wish to be the next Buffet and build longer track records usually charge less for sub fees and won’t go broke with the listing fees. Seems everyone’s interests would be more fairly aligned.
Have this tiered listing fee system in place as al a carte for each system a developer runs. This tiered schedule would be in place whether a developer runs one system or six. This could simplify some of your packages.
Require that developers can’t charge zero for subscribing to their systems. Have some sort of minimum like at least $40 per month. Charging zero for a system hurts C2 as a business and possibly other competing systems by this artificial predatory low price. ——-Just my 2 cents. Thank you.


#14

I understand - let the buyer beware. But C2 has an opportunity here to make it friendlier and safer environment - simply saying that it is incumbent on the subscriber to make sure someone is stable before subscribing to their system shifts all the burden on the users when C2 is in the unique position to protect them at least somewhat.


#15

@TrendSurfer …and you will make all good developers gone from C2.


#16

Matthew has addressed David Juday’s issue #3, which David even states he understands why C2 doesn’t do from a business perspective. Although, if only “track records matter”, all reasonable efforts to keep a leader linked permanently with their past track records is what is really being asked for.

But issues #1 and #2 haven’t been addressed at all. A stress test for all markets is probably a huge task to expect of C2 and perhaps impossible to apply to futures, options, and forex, where markets may be continually monitored, but stops not necessarily placed in the markets. But for #2, how about eliminating n/a from any individual trade max dd (sometimes high dd is masked by n/a), and making sure that the max dd at the top of the system page isn’t less that the max dd shown for a specific trade below (this does happen). And working to make simulated trades have a reasonable reality to fills and liquidity in the real world-like TRADING THROUGH the spread. Issue #1 and David Juday’s solution for issue #1 should be a no-brainer and easy to do.


#17

I’m waiting for a topic:

Collective2’s Official Position on bid/ask spread

It will be more productive than this one (a bone to hungry dogs).


#18

Thank you, Captain Obvious. Please make it CAPS and larger font size.


#19

There is nothing funny in my words. You are such a forum - the new system means a fraudster. You will answer for your words. Desire, money, time and you are a good defendant on the article of slander. Watch your words. Do not think that the Internet makes you not vulnerable and unpunished. Think and then write.


#20

Please re-read my sentence until you understand it. If you are not able to do this, please find a person who can help you to understand it correctly. There is no a single word in my sentence about new strategies.