Thursday, December 18, 2008

Woe betide those greedy enough to invest in hedge funds when times were booming…

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 (1395 views)
Please complete the required fields.



9 thoughts on “Woe betide those greedy enough to invest in hedge funds when times were booming…

  • Eternal Sceptic says:

    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.

    Reply
    Please complete the required fields.



  • Nice post. Also see this related article:

    The Economist: Hedge fund lock-ups
    Clients have been duly disillusioned this year. The average fund lost 17.7% in the 11 months to the end of November, according to Hedge Fund Research, a consultancy. That may be better than equities but is hardly the “absolute return” the industry promised. And the losses that have been revealed may be understated; had investors been able to redeem all their holdings (forcing managers to sell more assets) things might have been a lot worse. Industry enthusiasts claimed hedge-fund returns were less volatile than their conventional, long-only peers. But the price was illiquidity; in other words, all the losses come in a big lump.

    A hedge fund is such a brilliant scheme, I wish I’d thought of it myself. Just get a load of suckers investors 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.

    Reply
    Please complete the required fields.



  • The trouble with hedges funds is that they arent.

    Reply
    Please complete the required fields.



  • 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.

    Reply
    Please complete the required fields.



  • 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.

    Reply
    Please complete the required fields.



  • 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…

    Reply
    Please complete the required fields.



  • 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?

    Reply
    Please complete the required fields.



  • 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.

    Reply
    Please complete the required fields.



  • Good point Tech. So Madoff isn’t a fraudster – he’s just creative.

    Reply
    Please complete the required fields.



Add a comment

  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user´s views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>