Thursday, Dec 18, 2008
Woe betide those greedy enough to invest in hedge funds when times were booming...
Private Equity Wire: Barbarians at the hedge fund gates
The 'Barbarians beseigeing the hedge fund gates' are hedge fund investors who simply want their own money back. But of course if that happens then hedgies will be out of jobs. So to avoid 'having to liquidate assets in a declining market', this article details all manner of schemes to prevent investors taking their money back. Of course, the fund values could just continue to decline further, in which case hedge fund investors will lose everything, having to watch their wealth disappear. Choosing to put my cash in an HSBC instant access current account looks like a more inspired move by the day.
Posted by doom&gloom @ 01:03 PM (668 views) Add Comment
12 Comments
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1. Eternal Sceptic said...
More dodgy investment vehicles run by even dodgier people. The only saving grave of the present debacle is that many of those who thought their net worth insulated them from the masses are rapidly becoming paupers themselves. I hope they find the experience character building.
Their is a God in heaven after all.
2. drewster said...
Nice post. Also see this related article:
A hedge fund is such a brilliant scheme, I wish I'd thought of it myself. Just get a load of
suckersinvestors to give you some money, then tell them they can't have it back. Keep milking the fees every year until the markets recover. Who cares if it takes twenty years or more for a recovery? (Japan's Nikkei is down more than 75% from its peak of 19 years ago). By that time you'll have retired to the Cayman Islands anyway.3. techieman said...
The trouble with hedges funds is that they arent.
4. drewster said...
Like any gambling, the casino makes the most money. I just wish I'd realised this when I was younger and chosen a career as a croupier.
5. doom&gloom said...
In time it may come to light that the whole hedge fund industry has more in common with Madoff's little con that people care to realise. The mistake Madoff made was failing to channel investments through enough opaque vehicles before giving a percentage of it back to investors. Although the fact that, "he has a 55-ft fishing boat called Bull on which he loved to take friends and staff." should have been a warning sign for the wary.
http://www.telegraph.co.uk/finance/3759702/Bernard-Madoff-Wall-Streets-Wizard-of-Oz.html
And as hedge funds are so dependent on leverage, every chance that they will be wiped out before people can get the majority of their investments out. Yes TM - the 'Hedge Fund' moniker is a misnomer for punting using high leverage.
6. doom&gloom said...
Drewster. I think the problem is that most of us DO have careers as croupiers, rather than being born to parents who are owners of the casino. Sorry for over-extending the analogy...
7. inbreda said...
3. drewster said...
Like any gambling, the casino makes the most money. I just wish I'd realised this when I was younger and chosen a career as a croupier.
Didn't one of the most successful hedge fund / bond market managers start life as a croupier and professional poker player?
8. techieman said...
inbreda funnily enough alot of the well know (sorry successful) traders are not at all what you would expect in terms of their academic background. You would think they would have degrees in maths and science but most of em are much more creative based - eg arts and musical instruments. So right brain rules.
9. inbreda said...
Good point Tech. So Madoff isn't a fraudster - he's just creative.
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