''If you put a thousand people in barrels and push them over Niagara Falls, some of them will survive. And if you take those guys and push them over again, some of them will survive. And then they’ll write books about how to survive being pushed over Niagara Falls in a barrel.'' Merryn Webb

If you compare Warren Buffett's stock pick PetroChina (PTR) to iShares FTSE/Xinhua China 25 Index (FXI) you get interesting results in 1 year, 2 year or 3 year period you would do better if you choosed Chinese ETF rather than company (PTR) itself.

You get this offer: To work for Warren Buffett as a portfolio manager with this condition - he gives you % from what you earn above S&P 500.

What this offer actually mean? It means if you can find him any economy that will do better than US economy he will pay you every year % from the difference between US and other economy.

If you choosed Egypt's index then from 1998 you would be on vacation and what more Buffett would pay you money every year.

See how funny this guru US-sector competition is.So many hours and hard work and at the end it is just bet on US economy.

This brings me to my other point: hedge funds. I will skip their salaries   FTSE summarized hedge funds into 3 groups so I will use their summary.

Directional
Equity Hedge
CTA/Managed Futures
Global Macro

Non-Directional
Equity Arbitrage
Fixed Income Relative Value
Convertible Arbitrage

Event Driven
Merger Arbitrage
Distressed & Opportunities
 

If you buy global ETF as mutual fund portfolio manager then people will pay you 1.5% p.a.,but if you call it global macro hedge fund strategy then people they will pay you 1.5% p.a. +  25% from new water mark profit.

The other option you have as a mutual fund portfolio manager is to buy ETC or if you want to squeeze more money from people then you can call your strategy CTA/MAnaged Futures. 

You can buy inverse ETF (Proshares Ultrashort ETF),but because you want to earn as much as possible then the best thing for you would be to call your strategy equity hedge - you have some shorts in your portfolio and now you can squeeze their money.

Last thing is the best why? Because it sounds professional. Convertible,merger,arbitrage etc. Here people pay for your knowledge that you can use leverage on both sides long and short :)

Sometimes there are bankruptcies in the worst performing sector. If you buy this sector ETF then you can call your ETF pick distressed & opportunities hedge fund startegy.

I want to look professional as well so I called my strategy:
Global,Long/Short,Leveraged,Multi (ETF,ETC,Currency),risk optimal strategy

Why risk optimal?
There are some suprises on the road:cooked accounting, lawsuits,sector downturn,political suprises etc.There should be some effort to limit the downsize as well.

So what about:

Global:33% Europe/America;33% Asia;33%Middle east/Africa
Long/Short:I blogged about it before but there are reasons why hedge funds are usually Long and Short at one time
Leveraged:100%Long and 30% Short= 130% = 30% Leverage
Multi:70%ETF,30%ETC;(stocks have commodity exposure = 70%ETF:30%ETC) EUR,USD,TKY,YEN,CAD,Yuan   
Risk optimal: as I showed in my previous blog posts.Strategy: single US dollar,US economy,long only didn't prove to be best in high interest rates,USA downturn.

I think that this strategy should force you to think in more possibilities,mind models and after some time it should give users required flexibility.
 
Write me what you think !