These past few days, I've been reading a book written by the Korean YouTuber 뉴욕주민 (@newyork-er), whose channel name translates to "New York Resident." Since I don't understand Korean, I had to read the Chinese translation. She was a Trader/Analyst at Northwood Hedge Fund. It's an engaging read.

From her book, she reveals some of the mysteries surrounding hedge funds. I've listed some of the main "disadvantages" of hedge funds below:

1. Since hedging involves "shorting," it comes with two significant pressures:

a. Potential losses can exceed 100%.

b. Borrowed stocks incur considerable interest fees, making them unsuitable for long-term trades.

2. There's pressure to turn a profit within a relatively short term, primarily due to administrative and management demands of institutional structures. 

However, group dynamics in hedge funds provide more opportunities for contrarian voices to be heard, making the decision-making process naturally more disciplined than that of individual retail investors.

Trader vs. Investor

Trader: A trader is like a hunter, needing to search and chase aggressively and regularly. The "prey" can either be strong but overlooked or large but weak.

Value Investor: A value investor is like a rancher. They introduce new livestock, care for them, breed them, and wait for them to grow.

Despite these differences, both the hunter and the rancher face the same mental enemies: hubris, impatience, and indiscipline. Both livelihoods depend on Mother Nature - capricious but always "right."

Be Humble

We must be flexible and humble in these professions. Be honest about what's happening. It's useless to argue with nature or try to prove that your weather-forecasting model is right.

Be Patient

Wait for the prey to come into range. Give a calf the time it needs to grow into a bull. As Warren Buffett famously said: "You can't produce a baby in one month by getting nine women pregnant."

Be Disciplined

Continuously hone your hunting skills. Perform the necessary daily chores on the ranch. Be prepared for failures and losses.

Investing is the most humanistic of sciences. While human cultures are ever-changing, the core of human nature remains constant.