Hedge Funds Back From The Dead
24/7 Wall Street out with a story about the rebound of the hedge fund business. They place a lot of the credit for this on the incredible run stocks have seen since March. I think there's something to that argument but I also think it needs to be pointed out that the hedge fund industry as a whole did better than the markets last year. Now that's not to say that they made money-for the most part they did not. It's also not to say that there weren't spectacular losses at some funds or to note that many went out of business. But I think one of the reasons for the interest in hedge funds is due to some of their investment strategies for both bull and bear markets which have been tested and found to work over time.
Firm marketing note. Like us, most hedge funds employ a variant view of the investment world. We employ certain hedge fund strategies for proper risk oriented private accounts. Please give us a call if you would like us to review for you what these strategies are and how they could be used in your investment portfolio.
Excerpt and link: http://247wallst.com/2009/07/21/the-remarkable-resurrection-of-hedge-funds/#more-41592
The Remarkable Resurrection Of Hedge Funds
Posted: July 21, 2009 at 6:07 pm
The recovery has really begun to lift all ships when the hedge fund industry can claim that it has risen almost instantly from the death that it suffered in the final quarter of last year......The quarter that just ended was one in which much of {their} bad fortune was reversed. Hedge Fund Research told the FT that assets under management rose $142 billion. Overall, performance of funds was the best it has been in 10 years.
There is a temptation to say that hedge fund managers got some of their skills back and that attests for the stunning improvement. What the industry has avoided advertising is that the S&P 500 rose from 676 in mid-March to 923 on July 1. A monkey throwing darts should have matched the 36% return in the index over that period.
The exciting performance has caused people who forecast hedge fund investments to assume that clients and potential clients will pour tens of billions of more dollars into these investment vehicles over the next quarter. That will undoubtedly happen as caution gives way to greed, the normal course of things after a huge market sell-off and partial rebound. Investors cannot stand missing the last train to the big party.
It will only be a big party if the market can run back up to where the S&P was two years ago at 1,200. This would mean that almost all of the money that evaporated in the collapse of equities would have returned, magically, in a short period of time......
The improvement in the prospects of hedge funds is a reminder of how short the memories of investors can be. March was as bad a month as most investors had experienced in a generation or longer. March is only a little over 100 days gone.
The risk that the market cannot go up much from here is rising. That is old news and something which is said by market analysts and economist every day. Their concerns do not seem to matter much. The broad indices are higher by over 6% during the last month. Each day that the market is supposed to pull back and catch its breath, it rises again. ............The chances for optimists to focus on more possibly good news could continue into the beginning of August.
Earnings may not be adequate to advance the market another 20%, but July unemployment numbers are only two weeks away. Job losses under 300,000 for the month could cause a frenzy of buying, no matter that 10% of Americans will be out of work. Hedge funds are for making money. Suffering is for those who are broke.
Douglas A. McIntyre
Posted: July 21, 2009 at 6:07 pm
The recovery has really begun to lift all ships when the hedge fund industry can claim that it has risen almost instantly from the death that it suffered in the final quarter of last year......The quarter that just ended was one in which much of {their} bad fortune was reversed. Hedge Fund Research told the FT that assets under management rose $142 billion. Overall, performance of funds was the best it has been in 10 years.
There is a temptation to say that hedge fund managers got some of their skills back and that attests for the stunning improvement. What the industry has avoided advertising is that the S&P 500 rose from 676 in mid-March to 923 on July 1. A monkey throwing darts should have matched the 36% return in the index over that period.
The exciting performance has caused people who forecast hedge fund investments to assume that clients and potential clients will pour tens of billions of more dollars into these investment vehicles over the next quarter. That will undoubtedly happen as caution gives way to greed, the normal course of things after a huge market sell-off and partial rebound. Investors cannot stand missing the last train to the big party.
It will only be a big party if the market can run back up to where the S&P was two years ago at 1,200. This would mean that almost all of the money that evaporated in the collapse of equities would have returned, magically, in a short period of time......
The improvement in the prospects of hedge funds is a reminder of how short the memories of investors can be. March was as bad a month as most investors had experienced in a generation or longer. March is only a little over 100 days gone.
The risk that the market cannot go up much from here is rising. That is old news and something which is said by market analysts and economist every day. Their concerns do not seem to matter much. The broad indices are higher by over 6% during the last month. Each day that the market is supposed to pull back and catch its breath, it rises again. ............The chances for optimists to focus on more possibly good news could continue into the beginning of August.
Earnings may not be adequate to advance the market another 20%, but July unemployment numbers are only two weeks away. Job losses under 300,000 for the month could cause a frenzy of buying, no matter that 10% of Americans will be out of work. Hedge funds are for making money. Suffering is for those who are broke.
Douglas A. McIntyre
posted by CR English at 9:08 AM
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