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> Financial speculation is parasitic and socially harmful without actually providing anything of actual real value. Is it parasitic? Look at it like mushrooms,

> Financial speculation is parasitic and socially harmful without actually providing anything of actual real value. Is it parasitic? Look at it like mushrooms, which is what hedge funds are to our society. They both eat dead and rotting tissue. Eg. overleveraged companies or companies which lie to the investors to defraud them. Hedge funds short the hell out of them to clear out space for better companies. Are mushrooms and financial speculators parasitic if they feed off dead bodies?

omginternets 7y ago
I know dreadfully little about finance, and your comment is quite intriguing. Could you kindly elaborate? How do hedge funds work, and what makes them particularly suited to recycling pathological businesses? Are there any notable examples?
- kthejoker2 7y ago
  Strongly recommend you get The Little Book of Hedge Funds by the Mooch himself, Anthony Scaramucci. Succinct and filled with history. But the basic concept of a hedge is an investment to offset risk you've taken on as part of another investment. The typical purpose of a hedge is to smooth out your expenses or returns - for example, you can use the futures market to more or less "fix" the price of whatever raw goods your business needs. Large equity hedge funds take this concept to the "raw goods" of companies on the stock markets. They take a overall long or short position in the market and then offset that by making smart individual long or short bets on companies they think will over/underperform the market. So to answer your question, what makes them "suited" is the business is based on their ability to identify companies out of step with the market. They do a tremendous amount of research and analysis to accomplish this, and they share this research with their investors so you can make an informed decision on whether to invest in their hedge fund or not. Think of them as well trained bloodhounds or military scouts, able to spot danger or opportunity before others are aware of it and take swift action to deal with it.

omginternets 7y ago

I know dreadfully little about finance, and your comment is quite intriguing. Could you kindly elaborate? How do hedge funds work, and what makes them particularly suited to recycling pathological businesses? Are there any notable examples?

kthejoker2 7y ago
Strongly recommend you get The Little Book of Hedge Funds by the Mooch himself, Anthony Scaramucci. Succinct and filled with history. But the basic concept of a hedge is an investment to offset risk you've taken on as part of another investment. The typical purpose of a hedge is to smooth out your expenses or returns - for example, you can use the futures market to more or less "fix" the price of whatever raw goods your business needs. Large equity hedge funds take this concept to the "raw goods" of companies on the stock markets. They take a overall long or short position in the market and then offset that by making smart individual long or short bets on companies they think will over/underperform the market. So to answer your question, what makes them "suited" is the business is based on their ability to identify companies out of step with the market. They do a tremendous amount of research and analysis to accomplish this, and they share this research with their investors so you can make an informed decision on whether to invest in their hedge fund or not. Think of them as well trained bloodhounds or military scouts, able to spot danger or opportunity before others are aware of it and take swift action to deal with it.