About Us | Terms of Use Addendum Disclosures and Disclaimers

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About Us | Terms of Use Addendum Disclosures and Disclaimers

Unread postby Richard Carlisle » Wed Feb 17, 2010 7:02 am

This addendum is an integral part of CFO's "About Us | Terms of Use" agreement. You may see the full agreement by clicking the link at the lower left of this page or by going to the login page and clicking the Terms of Use or the Register link there.

About managed funds

If you decide to turn over your funds to a manager of any type, including registered professionals with well-known firms please be aware that the past results of managed accounts and / or pooled funds and / or their managers are not indicative of their future results. There is risk of loss as well as the opportunity for gain when investing in managed funds. When considering alternative investments, including hedge funds, you should consider various risks including the fact that some products often engage in leveraging and other speculative investment practices that may increase the risk of investment loss. They can be illiquid, are not required to provide periodic pricing or valuation information to investors and may involve complex tax structures. They may delay in distributing important tax information, are not subject to the same regulatory requirements as mutual funds, often charge high fees, and in many cases only the manager knows what the underlying investment is. Indeed, in some cases, the manager has literally "Madoff" with the funds before authorities intervened. We at CFO urge you to take responsibility for the management of your own funds.

About Richard Carlisle

Richard Carlisle, your anchor, host and producer of ChartFactors.org, is not a registered advisor, does not provide professional advice or control investor's funds. He operates a discussion board for independent traders and his comments are expressions of opinions only or merely show and explain to you what he is doing, considering or has done. You should apply these same considerations to posts from CFO subscribers.

You should not construe these expressions in any manner whatsoever as recommendations to buy or sell stocks, options, futures, bonds, commodities or any other investment at any time. While he believes his statements are accurrate, they always depend upon the reliability of his own credible sources. Of course, he recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and barring that, we encourage you confirm the facts on your own before making important investment commitments.

About hypothetical performance results

Participants in our forums, and indeed, anywhere in the financial arena may demonstrate or explain their ideas using models that show what could or should happen in the future. They may at any time and without notice to you or anyone else, do this by demonstrating what supposedly happened in the past under similar circumstances but if they demonstrate their trades using past data without the trades actually haven taken place, they are in fact using hypothetical or theoretical trades or actions.

We mention this hypothetical-versus-real issue, as we want you to be aware that many industry participants in the past have offered products based upon "Cuda-Shulda-Woulda-but I didn't" demonstrations. There is nothing inherently wrong with this method as it may help to explain a difficult concept. However, a potential deception arises if the presenter fails to disclose that his historical model is hypothetical or worse yet, you base your understanding and beliefs upon the demonstration as having used actual trades and actions instead of hypothetical ones and it persuades you to buy the presenters' trading plan or invest in their individual managed account or pool.

Of course, CFO does not manage other people's money nor advertise or sell systems in the posting areas. The posts you see should merely explore trading ideas explain concepts and discuss news as the markets progress in time but someone may still use what could be deemed hypothetical data to deliver their point and neglect to inform us that the trades are indeed hypothetical. You simply should be aware.

One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. Additionally, hypothetical trading does not involve financial risk. Therefore, no hypothetical trading record can completely account for the impact of financial risk in actual trading. For example, your ability to withstand losses or to adhere to a particular trading program in spite of a trading loss is a material point, which can adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program, which the presenter cannot fully account for in the preparation of hypothetical performance results, all of which can adversely affect actual trading results.

If the person presenting the plan has had little or no personal trading experience or no experience in trading actual accounts for others then there can be no actual trading results to compare to the hypothetical performance results. You should be particularly wary of placing undue reliance on these hypothetical performance results, likewise, for composite funds or pools and / or multiple managers.

Anyone may demonstrate or explain their ideas or plans using models of what could or should happen in the future. If they do this by demonstrating what supposedly happened in the past under similar circumstances but merely demonstrate the trades without them actually haven taken place, they are in fact using hypothetical or theoretical trades or actions and the trading advisors have not traded together in the manner shown in the composite.

Again, hypothetical performance results have many inherent limitations, some of which we describe below. Again, we make no representation that any accounts will or are likely to achieve profits or losses similar to those shown or that any multi-advisor managed account or pool will or is likely to achieve a composite performance record similar to that shown. In fact, there are frequently sharp differences between a hypothetical composite performance record and the actual record subsequently achieved.

One of the limitations of a hypothetical composite performance record is that decisions relating to the selection of trading advisors and the allocation of assets among those trading advisors are prepared with the benefit of hindsight based upon the historical rates of return of the selected trading advisors. Therefore, composite performance records invariably show positive rates of return. Another inherent limitation on these results is that the presenter did not make the allocation decisions reflected in the performance record under actual market conditions and, therefore, cannot completely account for the impact of the financial risks of actual trading.

Furthermore, the composite performance record you see may be inaccurate because the allocation of assets in real trading change from time to time and the hypothetical composite may not reflect these adjustments.

If the presenter has had little or no experience allocating assets among particular trading advisors and there are little or no actual past allocations to compare to the performance results from the hypothetical allocation, you should be particularly wary of placing undue reliance on these results. This is just one more reason why we at CFO encourage you confirm the facts on your own before making important investment commitments.
Richard Carlisle
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Richard Carlisle
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