Please pardon this self-indulgent post.

In May of 2003 I started a hedge fund, and mostly departed from The Motley Fool. Recently I closed it, and have returned.

My intention was to run the fund for a year, build a track record (albeit a short one), then take that record to investors and try to raise capital. Although the one year record was good -- great, actually -- let's just say that as a salesman I'm a good stockpicker. It rapidly became clear that I have little to no talent for finding investors and bringing them in. Literally, I had no clue as to how to do this.

I look back now and try to imagine how I thought that part of the process could possibly be successful, given that I do know myself fairly well and I know that I do not have the talent for salesmanship. I believe part of the logic was that a successful record would attract capital. The harsh reality, at least for me, was that I could build a better mousetrap, but if I was legally restrained from advertising it broadly (as hedge funds are) I was going to have trouble getting people to buy it.

(Incidentally, this legal restraint seems not to have applied to such august personages as Mohnish Pabrai, who for a considerable period of time had his offering documents and performance records available and visible to all comers at his pabraifunds.com website. Now that he has enough AUM, he appears to have begun playing by the rules the rest of us are required to follow.)

During the same period I had begun writing for a website called Street Insight, a rather expensive publication of thestreet.com. I had hoped this might be a way of attracting investors. During the year I wrote for the website, I was approached by exactly one potential investor, who did not have the courtesy to return any of my follow-up e-mails, even to express a lack of interest in investing with me.

Although I had been talking to accredited investors and believed they would probably come into my fund shortly, the amounts they were willing to contribute would have brought me nowhere near the amount of assets under management that would have been required to make the money management company successful. Facing the exorbitant cost of a year-end audit, I decided instead to close down and return what assets I had been given to my investors.

It is also worth mentioning that I chose the hedge fund structure over a separate account structure largely because I did not want to deal with the overhead of trading separate accounts, even in block trades. I preferred the big lump in one account. While this did have certain practical advantages, it added regulatory overhead that I could have done without, and accounting overhead which was simply annoying. This may have been a tactical error.

Also, because I was trying to run the fund as inexpensively as possible, I selected an accounting firm that turned out to be absymal in its leadership at the top, with no concept of customer service. (Imagine, after a year-long relationship involving payment in advance for services, always made when requestesd, receiving an e-mail requesting from your accountant soliciting a further retainer and being told that your assigned accountant has "stopped working on your account" until that retainer is received. Talk about poor client relations!) The foot soldiers there were very helpful, but the general is useless. Should I do this again, I will certainly scrutinize very carefully the accounting firm that is going to provide back-office support.

On the good side, the fund was up 55% for the 1.5 year period (past performance, of course, is not indicative of future results -- especially in this case, where there will be no future results, at least for this fund), and everyone who invested with me made money. I'm happy to have escaped the normal hedge fund blowup scenario -- "Hi folks, I lost 50% of your money, and I'm exiting the business -- thanks!", and particularly so because I know all of my investors personally, and would have hated like hell to have lost them money.

So now I'm back where I was some time ago, debating whether to run my own money (most probable at this point), hand it off to someone else, or even whether to try making a fresh start with a management business by raising the capital first rather than later.

We shall see . . .

There's one final thing. At some point in the past I made a remarkably asinine and insulting remark to the person who at the time may have been called GreenMartian, too embarrassing to repeat, regarding what I considered to be the small amount of money he had under management. I suppose that, looking at that amount and comparing it to large mutual fund firms or whatever, it was legitimate in some basic sense to say that the amount was small.

But having now tried to raise capital on my own I am painfully aware of the prodigious difficulty that such a task entails, and what an accomplishment raising the amount of money he has under management really is, especially as an individual trying to establish a money management business. Furthermore, that handle-changing money manager has established an enviable track record which has had the salutary effect of increasing his assets under management substantially, as he has produced excellent results for his investors over the past X (10?) years.

Therefore, I want to sincerely and publicly apologize for having said such a foolish thing. It was totally and utterly out of line, as well as being just plain dumb. I'm sorry. And congratulations on your continued success.

UsuallyReasonable