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Because the fund manager's downside is capped at 0. Bankruptcy heals many ills. Also because of the survivor effect: if 3 hedge funds do poorly and one does in
by mcherm 9y ago
Because the fund manager's downside is capped at 0. Bankruptcy heals many ills.
Also because of the survivor effect: if 3 hedge funds do poorly and one does incredibly well, guess which fund manager gets interviewed on the news. And don't be surprised if the analysts decide that half of the funds were incredibly successful (since 2 of the 4 were really in a different category and shouldn't count).
- viraptor 9y agoI'd put downside capped at 0 and bankruptcy in different groups. At the very least you lost time. You probably also had some investment in the business. Downside capped at 0 would be some opportunistic investment using spare cash with a gain or 100% return guarantee.
- Retric 9y agoBut, you get the carry of some percentage which should pay for your time.