1) Convince them you are a genius. 2) Throw the dice, 3) Craps they lose, you move on to another set of suckers. opm, opm, opm, opm, opm, opm, opm, opm, opm, opm, opm, opm, opm, opm, opm, opm, opm, opm, opm, opm, opm
I dont have a problem with people losing other peoples money, but the US seems to think that everyone should share in the loses not just the institutions, debt holders, equity holders. Until we restore that belief I dont think the US economy will be firing on all cyclinders and risks becoming much more crony capitalist
the best performing hedge fund of all time is called brk.a. the manager has impeccable track rrecord.
Admittedly I'm a sample size of 1, but maybe the rest of the herd feels like I do. When the stock market started selling off I wanted to get my money out of the hands of my long only managers and started looking for hedge funds, or better yet, a fund of funds. Two weeks after making my decision, I heard on BNN that people had started to move out of long only funds into hedge funds in droves. (And here I thought I was an independant thinker). I've been researching and interviewing but haven't moved our money yet. Now this blow up comes along (I'm watching the devastating effects of the unwinding on the TSX) and I've got cold feet. The guys managing my money now are also "experts" and charge less than 2%.
This event make me convinced nobody shouldn't ever give a nickel to hedge funds. It doesn't matter their track record or CV , I will be paranoid from now on. If you are so good at knowing exactly which manager can outperform(because you know whats important to beat a benchmark) then you know how to do it yourself in the first place. Also you need to keep in mind you are trying to pick winners out of a universe that destroys wealth(buffett makes this point, I believe the HF indexes are quite misleading) so the comparison with the corporate world is not correct since stocks on avg will give you returns. You got risk premium working against you with HFs. If a HF manager is a net dollar loser in his lifetime then most of his networth came from fees and not capital gains, he's probably a glorified salesman. I bet tons of managers are net dollar losers in the market, but I bet they will try to mislead you with compound annual returns