Re: [Pen-l] Hedge funds, speculation and capitalism

["Jim Devine" <jdevine03@xxxxxxxxx>]

me:
>> The author (Mick Brooks) should make it clearer that "Hedge Funds" are
>> not really in the business of "hedging" (where the latter refers to
>> the way a farmer tries to avoid the downside risk that the crop will
>> be worth less in the fall). Instead, "Hedge Funds" are speculating

Doug:
> More important than the naming issue is this claim: "The attraction for rich
> people in 'investing' in hedge funds is that they promise, and deliver,
> returns of 30% a year." Sometimes they do; most of the time they don't...

absolutely right! the key for a hedge fund is to get a return of 30%
per year when times are good but when times are bad (and excessive
leveraging leads to punishing negative returns) to get the government
to socialize the loss.

>> JOHN M. GRIFFIN & JIN XU's Abstract concludes that  "... our study raises serious questions about the proficiency of hedge fund managers."

Perhaps that's the wrong question. They might want to look at the
political connections and/or government subsidies that characterize
hedge funds. These would compensate for any inadequacy of competence
compared to mutual funds. One kind of subsidy that I know is that
hedge funds don't have to reveal anything to the SEC. Are there
others?
-- 
Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own
way and let people talk.) -- Karl, paraphrasing Dante.
_______________________________________________
pen-l mailing list
pen-l@xxxxxxxxxxxxxxxxxx
https://lists.csuchico.edu/mailman/listinfo/pen-l