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I love hedge funds!

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Hedge funds are the favourite pinatas of most people. The trouble at Amaranth has everyone out in full force beating up the hedge funds. The media loves these kind of scandals. Bad news always sells in media. Soon the politicians will join in. It is such a tempting target and you can always spin it as a class struggle because hedge funds are for rich people only.

Some are blaming investors, some are blaming regulators, some are blaming the big banks, Paul Krugman will blame George Bush, some are blaming the markets. Some are even blaming the US constitution for this! Lot of this is envy. Lot of it is vicariousness. Like the way we enjoy Hollywood gossip we like hedge fund scandals.

Even before the full details of what happened have emerged the race to bit the pinatas is on. Hedge funds and hedge fund managers who can not raise capital or can not make money for their investors are out justifying their own failures or mediocre performance. Day traders and sundry other traders are offering advise to hedge funds on risk management. Newsletter writers are quickly touting magical risk management strategies.

The fact is that the pool of investable capital remains constant. The money in hedge fund would still be in market invested by someone else in some other form. Besides that the simple fact is that simply there is a need for high returns by several investors. The hedge funds are just capitalising on that need. Hedge funds exist and are prospering because the markets needs high return vehicles. Needs pre exist marketers. But it is always the marketers who get the bad reputation.


Be a contrarian. Hug a hedge fund manager today. I love hedge funds!
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