The margins diminish because the arbitrage-methodologies of the investors converge.There are simply to many playing the same game and possibly also because broker jump on their clients strategies, once they find outthat they are succesfull (cut out the middleman!).But besides that, your technique has to be sensible to a finer structure topology. Additionally, I think that market microstructure hasnt been reallyconsidered sufficiently. There are simply to many who still think in spot-prices. I apologize for making "esoteric" arguments, but I am not willing to go into examples.

First thing before starting a hedge fund is to watch "Office Space".====================================================== Peter Gibbons: What would you do if you had a million dollars? Lawrence: I'll tell you what I'd do, man: two chicks at the same time, man. Peter Gibbons: [laughs] That's it? If you had a million dollars, you'd do two chicks at the same time? Lawrence: Damn straight. I always wanted to do that, man. And I think if I had a million dollars I could hook that up, 'cause chicks dig a dude with money. Peter Gibbons: Well, not all chicks. Lawrence: Well the kind of chicks that'd double up on a dude like me do. Peter Gibbons: Good point. Lawrence: Well what about you now? what would you do? Peter Gibbons: Besides two chicks at the same time? Lawrence: Well yeah. Peter Gibbons: Nothing. Lawrence: Nothing, huh? Peter Gibbons: I'd relax, I would sit on my ass all day, I would do nothing. Lawrence: Well you don't need a million dollars to do nothing, man. Just take a look at my cousin, he's broke, don't do shit.

Just a comment: I should not have used the figure "30-40%." Obviously, that is not really possible, and it made me sound naive. Perhaps I should have said, "10-15%."I agree that the odds of someone with my lack of experience is unlikely to be successful at this point. I need to get more experience before I can get anywhere. However, I still might want to start a hedge fund someday. I think I just need to spend a few years learning a little bit more about a few things, including what is realistic and what isn't.Also, I've seen Office Space...what is the significance of the quote you provide, I don't think I understood whatever point you were making? Were you implying that wanting lots of money so that one can do nothing is the wrong reason to go into finance? If so, I can assure you that I am not interested only in "lots of money," and I definitely don't want to just do nothing.

QuoteOriginally posted by: halikQuoteOriginally posted by: ymousQuoteOriginally posted by: halikQuoteOriginally posted by: cplxphil Suppose someone like me were able to develop a mostly automated process capable of allowing me to consistently generate 30-40% returns annually. -PhilQuoteThere is always enough Alpha. The question is are you smart enough?! Lower Manhattan is filled with Ph.D. folk, making 7figures+, whose sole goal is to make sure that very scenario is impossible.And they accomplish that goal by taking that alpha. Alpha is there.Exactly my point!What happens to the alpha once the phd quants get to it?They sell their alpha to those who think it remains.