There are many wannabe hedge fund managers and many of them fail in a short space of time for a variety of reasons:

Experience. A number of fund managers have youthful exuberance and believe that they can jump straight from university to running hedge funds.

Expecting people to give you money to manage with no experience is a joke, no matter how unique your ideas are as to how to make money.

Also, remember that no matter how unique you think your ideas are, there is a good chance that someone else has had the same idea. Research what others have done and especially the failures to ensure you do not make the same mistakes. This not only applies at the start of one's career but throughout a career.

Studying failures is most probably more useful than studying successes. The reason is that some of the reasons for success are deliberately withheld. Why would a successful fund manager share his recipe with others who can become competitors?

There is a need for learning the basics of investments. Experience is usually gained in the general investment market. It can be learnt as an investment analyst, leading to a fund management position. Excellent hedge fund managers are also good long only managers. They carry out intensive research on companies. This can equally be used for long portfolios. The bad companies are great for shorting. Then move to a prop trading desk to learn how to trade markets. However, many prop traders know little else and hence do not have a basis of fundamentals in investments and markets.

It is essential to go through an apprenticeship to gain experience.

Study history as much as you can. This is not only business history which is a narrow base. Gain a broader outlook. History repeats itself over and over despite major advances in technology. Take war history for example. Did Hitler learn from Napoleon when he invaded Russia? He made a number of cr......................

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This article was published in Opalesque's New Managers a top-down monthly analysis, news and research publication on the global emerging manager space.