Dejan Ilijevski, MS, MBA, has over 15 years of experience in the trading/financial services industry. He has an MBA from the University of Chicago Booth School of Business, a Master’s Degree in Computer Science, and a Bachelor’s Degree in Chemistry.
As a fixed-income trader at the Chicago Board of Trade, Dejan transacted over $1 billion dollars/day and more than 1% of the global 10-year US Treasury note volume. He was a VP and Director of Discretionary Trading Operations of a start-up proprietary trading firm, where he developed and executed the firm’s innovation strategy. Dejan oversaw the design and development of an industry-leading spread trading software and helped maintain the firm’s competitive edge during the high-frequency boom. When he left in 2014, the firm had grown to almost 200 employees and was still considered among the trading industry leaders in Chicago.
Despite having all of the latest tools and technology, traders are still no match for the markets. The truth is that competing against millions of other participants is difficult. The odds of sustaining a career as a trader are slim (by some estimates, less than 5%). If the professionals can’t consistently outwit the markets, then it didn’t make sense why brokers/advisors were charging clients a premium (e.g., commissions, frequent portfolio turnover, trading costs) for their supposed skill. This was an “aha” moment that led Dejan to more closely look at his advisor’s approach to investing, as well as the evidence on speculation in general. It turned out that a history of data, academic research, and real-world results actually showed that forecasting was a losing investment strategy. Stock-picking and market-timing were nothing more than cost-generating gimmicks, draining wealth from investors and into the pockets of brokers and advisors.
There happens to be a simple, yet powerful idea that helps explains why forecasting is difficult – an idea that should convince you to embrace the markets, rather than trying to beat or outwit them. Think of the markets as an efficient information-processing machine. Millions of participants quickly incorporate the latest news, information and expectations into security prices. For example, professional traders monitor major economic news and indicators by subscribing to real-time news services. High-frequency traders go many steps further. Their algorithms are plugged in directly to news sources, parsing the feeds for actionable data that automatically trigger buy and sell orders. These market participants react in milli- and micro-second time frames. By the time you blink, a history of trades has already taken place.
If markets are efficient, then the only way to predict what tomorrow will bring is to know tomorrow’s news. It’s the news that will drive securities prices tomorrow. If news, by definition, is information not previously known, then how do you predict it? Well, you need a crystal ball or some magical powers.
Sabela Capital Markets
For many years thereafter, Dejan advised his friends and family on how to invest by emphasizing sound investment principles like discipline, diversification, and minimizing costs. After earning his MBA, he left the trading industry to fulfill his longstanding goal to help individuals and families improve their odds of investment success. He established Sabela Capital Markets to provide clients a fiduciary standard of care based on integrity, transparency, and financial science.