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33 Options Trading: A Dangerous Animal? with Luc Van Hof of Capital Hedge – 1of2

“We are more of a research company than a pure trading firm – trading is more a byproduct of what we do in terms of the research.” – Luc Van Hof (Tweet)

Our next guest worked for the European Commission before starting his own firm. In an unusual career twist, he sold his company to a larger firm only to buy it back from them a few years later and had to start from scratch. Learn about his aversion to risk, his short term trading strategies, and his interesting past as one of the fastest readers in the world.

Thanks for listening and please welcome our guest Luc Van Hof.

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In This Episode, You’ll Learn:

  • About Luc’s time working for the treasuring of the European Commission starting in 1985.

    “We had the luxury of being provided with an immense amount of ideas, being provided by investment banks.” – Luc Van Hof (Tweet)

  • How he learned about Options trading before many people were doing.

    “Options trading was not very well known – it was considered a dangerous animal, like let’s stay away from it.” – Luc Van Hof (Tweet)

  • About his years working for Bankers Trust in London and Morgan Stanley as a trader and how those experiences influenced his career later.
  • How he started Analytic Investment Management (AIM), doing options trading.
  • How he acquired his first clients.
  • Why he got started trading currencies.
  • About the early days of trading and the physically demanding work before computers took over.
  • How his attendance at conferences, getting invited to speak on panels, and other speaking engagement led to the sale of his company.

    “We had the good balance of not being a startup derivatives firm, but not having grown to a multibillion dollar company.” – Luc Van Hof (Tweet)

  • About the selling of AIM to Trobico in 2006 and why trobico bought his firm.
  • How he ended up buying his company back from Trobico in 2010 after management changes caused them to shut down everything in the alternative investment space.
  • About the different products that Capital Hedge provides.

    “We were able to difference ourselves because we were trading very short term and very controlled risk, that was something that was very appealing to many people.” – Luc Van Hof (Tweet)

  • How he had to start from scratch, getting all new investments after buying his firm back.
  • Where he is now – advising $200 Million US dollars, mainly in his DPI program.
  • How he is one of the fasted readers in the world, and how he learned to speed-read from a class he took in the Netherlands.
  • How he convinces institutional investors that a 2-3 person company is enough to manage the investments they have, and how technology has changed the game from needing a staff of 25 to needing just 2.

    “I would have to employ 3 times if not twice as many people to do the same thing with the organization I have – because the technology has made such progress.” – Luc Van Hof (Tweet)

  • How small managers need to describe what they do, and why they might not want a multibillion-under-management hedge fund.
  • How investors should look at a track record of a firm and why that doesn’t necessarily mean good returns in the future.
  • Why investors should see the latest test of what the firm is currently running rather than worry too much about the historic model results.
  • How Luc trades and develops his systems, and how he looks for patters in the market.
  • How to avoid model decay and avoid the risk when the model will stop working in the future.

Resources & Links Mentioned in this Episode:

This episode was sponsored by Swiss Financial Services:

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“The sustainable edge – it is extremely difficult to find it, but once you’ve found it it’s relatively easy to keep it.” – Luc Van Hof (Tweet)