I think it is hilarious that people here are discussing what legal paperwork to fill out, etc, so that the original poster can “put it all on black” with $5,000. Your friend is a moron for giving you money to manage. “My global, top-down approach coupled with my technical analysis skills intrigues him.” "I have bought one stock and will hold it for 6 months. That’s it. It’ll cost him $14 per round turn. He very well may lose it all. So yes, it is roughly the same as putting it all on black. " WTF kind of “global top down approach” results in buying one stock and holding it for a predefined time period?
^Yea, sounds easy enough now doesn’t it. I mean, with $5,000 you can purchase about 100 shares of a public company, and than the sky’s the limit. If you are just going to invest in 1 stock, why not simply throw the money into a mutual fund? IF $5,000 is everything your friend has to invest, then it would be stupid to take such a large gamble in 1 asset. Top Down Approach? You might as well just close your eyes and take a random stab at this morning’s wall street journal.
Are you buying him Spiders?
I think we’re getting a bit off track here. Let’s forget about my approach, my friend being a moron, what I’m investing in, whether I diversify or not, how small the account size is, etc… None of that really matters. Just try to think about from my standpoint. How would YOU arrange this situation, in writing, from both a tax standpoint and a contractual agreement standpoint? Do I need a license? I most likely will talk to an accountant. I just figured maybe someone here has experience with this type of situation and could offer me factual advise. Cheers all!
This all sounds very strange to me. Why don’t you have your friend gift the $5000 to you and you trade the amount in your own account, with the understanding that at some point in the future (preferrably at a defined time), your friend can choose to demand $5000 or the total value of the account, whichever is smaller. If you want, you can also stipulate that taxes and transaction costs will be deducted from the account value and that the money will not be used for any non trading or investment purposes (i.e. you can’t pull it out of the account and buy flowers for your mom or something). I don’t think you need to be licensed for this sort of activity, since you are not advertising your abilities to the public to attract more capital. People are allowed to trade their own accounts without having to be licensed, and you can set up a trust account with you as the fiduciary for another person without having to be licensed. The cost of setting up a trust might well be a huge portion of the initial capital, though.
With that sum of money there’s only one option. I’m only gonna say this once so pay attention. You must invest all of it in frozen concentrated orange juice futures contracts. But before you do this, there are a few things you have to do… Find a couple of wealthy magnates that are willing to entrust all of their finances with you in the name of a social experiment. When they hatch their plan to steal the crop report (which is inevitable, how do you think they became rich?), you dress up as something creative (rastafarian, priest, etc) and sneakily pry it from their henchman on a train (must be done during halloween though, so you may have to wait until next year). After that, pose as aforementioned henchman in a dark place and hand them a fake crop report, without letting them see your face. Then wait until the precise moment where the price of FCOJ futures are at a low point after mortimer and…er, the rich guys have sold the shite out of them with their false information. After the crop report’s announced, prices soar. Next thing you know, you’re rich, banging a hot, young jamie lee curtis and enjoying mojitos on some private beach.
“Next thing you know, you’re rich, banging a hot, young jamie lee curtis and enjoying mojitos on some private beach.” She was never hot…but overall your idea is extremely sound.
^Funny stuff…haha I don’t understand why so much work should be involved when you’re only going to make something like 2 transactions a year. Why don’t you just do some research and then tell your buddy what you think would be a good idea to invest in and just have him do the trade??? All this stuff about licensing and contractual agreements is very unneccessary. An accountant? I mean, its not like your handling 50 accounts worth upward of $100,000 each. Again, just do a little “top-down” approach or whatever you said you were going to do(why you dont simply invest in a mutual fund is beyond me) and then give him a call. Thats it. What are your goals? You say you your friend wants “fast and calculated action” and maybe “double or make a 5-bagger” yet are just going to invest in 1 stock for a period of atleast 6 months - and he doesn’t want enough risk to lose all his money. The goals and constraints just don’t seem plausible. Do you want to make a 5-bagger? well, then you might want to invest in something less than $5-10 bucks a share with a lot of risk. Odd’s are, you’ll lose all your money. Do you want capital appreciation, then put it in a mutual fund which will reinvest the dividends and capital gains - that is assuming the market performs well. What I am trying to say here is that the HARD part about investing should not be accounting/written agreement specifics, especially when the account is less than $5G.