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An honest question: Why don't hedge funds buy lottery tickets?

• gvb 14y ago
  Hedge funds are hedging against (sort of) specific bad things happening. To do this, they buy into an investment that (hopefully ;-) has a [edit] positive correlation to the "bad thing" they are hedging against so that, if the bad thing messes up your primary investment, the hedge investment gains compensate (some of) your losses. Example: http://money.stackexchange.com/questions/6473/where-should-i-invest-to-hedge-against-the-stock-market-going-down http://money.stackexchange.com/questions/6473/where-should-i... Since winning the lottery is not correlated at all with something bad happening to an investment firm's investments, it is a very poor hedge against their investments failing to come through.
• andreasvc 14y ago
  Because it wouldn't make them money (expected value) and would probably be against the rules anyway.