Sigma1′s investing plans are hitting an inflection point.  On one hand, I’m very happy with Sigma1′s investment tack in the current economic environment.  On the other hand, I’ve been reading a lot of securities law and regulations, and finding a rigid framework that makes creative cost structures, well, virtually impossible.

In essence, I’m learning that many of the cost structures I’ve found undesirable in many funds (like sales loads) have been necessitated by the relatively immutable laws of economics and law.  There is a definite pressure from the confluence of economies of scale with the regulatory compliance costs biased towards larger funds.  The break-even point (in terms of AUM) for a fund is about 5-10X higher than my initial estimates.  I’ve been delighted with the low costs of proprietary trading, and frustrated with the regulatory and legal expenses of setting up a tradeable investment fund.

One thing is certain.  I’m going to keep on trading and investing.  Whether I put up the funds to take Sigma1 to the next level… that is more uncertain than late 2010.  But I’m still exploring options.  I’d love to make it happen.  It might take a long time, but I’ll make some tough decisions, and when I do, I’ll publish them here first.  Stay tuned.