Option Fanatic, RIA (Part 3)

I left off discussing some potential disadvantages to the business of trading OPM. My ultimate goal is to decide whether this is the next logical course of action for my personal trading.

Another post I found through my Internet research follows:

       “Unless you are dealing with very sophisticated people who understand
       risk… evaluate your friends and family. How will they feel about a 30-40%
       drawdown… in at least 95% of the instances, you will reach the conclusion
       that they are incapable of understanding and bearing risk… it is not all
       wine and roses.”

I feel strongly that concern over how others will react cannot guide my thinking. I set the bar at being true to myself. I can do this with a comprehensive presentation that accurately describes my understanding of the risk. I would strive to educate why this is about probabilities and not about certainties. An instructor used to say, “as with the markets, as in life: there is no free lunch… only pluses and minuses.” My job is to explain these completely. Provided I do this, I will not have blame on my conscience should clients later determine it was worse than expected.

       “I bet your friend has NOT asked you to show him… trading plans, money
       management plans, max drawdown… Did he say something like… ‘I heard
       you doing well… trading… I have $100K… you trade it for me and I’ll look
       after you…’ golden rule… in managing OPM… get the right client… they
       have to understand what you are ‘selling’… You got [sic] to also
       understand what you [are] getting yourself involved in, its a huge
       responsibility. If it’s not crystal clear and planned out it will cause… more
       trouble than you ever imagined.”

Many points here follow nicely from above. My goal is to be crystal clear about risk to the best of my understanding.

I’m not sure what the “right client” is… someone who actually understands what I say? I could follow-up my presentation with a test to make sure they understand. Although strange, I like the idea. Remember the asterisk. I want something to set me apart in order to escape the greed and sociopathy that I feel inundates the financial industry.