Posts filed under “Hedge Funds”

Cheap & Simple Beats Costly & Complex

returns

 

Have a look at the tables above showing the performance of various investments during the five years leading up to the financial crisis lows, and the five years after. It leads us to a rather fascinating exercise, looking at complexity, cost and performance.

Let’s start with the worst performers pre-crash: US Real Estate and Equities. Prior to the collapse, stocks had nearly doubled (March 2003 to October 2007). Note that doubling began just 3 years after the tech/dot com implosion. The peak to trough collapse of the S&P500 is even worse than that five-year track record suggests, falling 57% in about a year and a half ending March 2009. Ouch.

The Real Estate collapse was even worse: Off 58% in that five-year period. Perhaps a  little context might help. Residential real estate was fairly flat (in real terms) from 1986-1996, before moving upwards until the end of the century, then exploding from 2001-06. Vacancy rates for office space in the 1990s was near zero; Shopping malls were getting built and sold off to REITs soon as they opened. Commercial real estate boomed in the 1980s, 1990s and early 2000s as real returns on fixed income was falling. The ROI for commercial real estate – and the low cost of capital – attracted lots of buyers looking for alternative to low bonds yields.

Continues here

Category: Apprenticed Investor, Commodities, Hedge Funds, Investing

What Is a Hedge Fund?

Source: SlideShare

Category: Digital Media, Hedge Funds

Hedge Funds: Bad Investing Versus Lawlessness

This weekend, I found myself in the rather unusual position of defending hedge funds. Before I explain why that is so unusual, allow me to explain what I was defending them against. Last week, Forbes released its annual score card of top-earning hedge fund managers. The usual gang was there: Soros, Tepper, Cohen, Paulson, Icahn,…Read More

Category: Hedge Funds, Investing, Really, really bad calls

Its all fun & games until someone loses an economy!

Source: Bianco Research This month, 1,865 pages of FOMC transcripts from 2008 were released to the public. Bloomberg studied the transcripts, finding on average about 25 references to laughter per meeting of the Federal Open Market Committee. This was almost half of the 45 giggles per FOMC meeting in 2007. Continues here

Category: Federal Reserve, Hedge Funds, Really, really bad calls

All Time Top 10 Hedge Fund Managers

Source: FT

Category: Hedge Funds, Investing, Trading

A Closer Look at Hedge Fund Under-Performance

  “The $2.5 trillion hedge-fund industry, whose money managers are among the finance world’s highest paid, is headed for its worst annual performance relative to U.S. stocks since at least 2005. The funds returned 7.1 percent in 2013 through November, according to data compiled by Bloomberg. That’s 22 percentage points less than the 29.1 percent…Read More

Category: Hedge Funds, Trading

Confessions of an Institutional Investor

Josh here – the other day I did a post about the amazing complexity and obsession with tail risk that’s caused so many professionally-managed investment pools to miss the market over the last few years (see: I don’t understand). Every general fights the last war, as they say, and a portfolio geared toward having a…Read More

Category: Asset Allocation, Hedge Funds, Really, really bad calls, Venture Capital

What Do Hedge Funds Spend On Regulatory Compliance?

Every now and then, I read an article that is factually accurate, technically correct — and utterly misleading. Items like this are “accurate but false” as they leave the reader with an impression of something that is incorrect. Because the world is nuanced and not black and white, the sum of many facts, statistics and…Read More

Category: Bad Math, Hedge Funds, Regulation

Skill vs Cost: The Myth of the Successful Money Manager

click for complete infographic
managed funds

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Category: Digital Media, Hedge Funds, Mutual Funds

The Price of Generating Alpha

Alpha is a zero-sum game, according to David Villa of the State of Wisconsin’s Investment Board. Here he talks about how making the right errors leads to high returns.

Category: Hedge Funds, Video