4 ms·
Yeah, probably. Its too bad.
by loco5niner 2mo ago
Yeah, probably. Its too bad.
- infecto 2mo agoWhy too bad? This is how the market ultimately comes to the right price.
- ymolodtsov 2mo agoIf there's any purpose in hedge funds as a structure it's that they provide liquidity for the market. So it's in everyone's best interest to let them do price discovery against each other.
- bagacrap 2mo agoIt's not just liquidity. Price discovery helps everyone. The earlier the correct price is discovered, the less we're all screwed when the bubble pops. I think they're rewarded too well for the function they serve but whaddya gonna do.
- ymolodtsov 2mo agoI mean, most of them underperform S&P, at least after fees.
- bagacrap 2mo agoI think on average they match a typical 60/40 portfolio on a risk adjusted basis. The goal is less to out perform long term and more to avoid big downturns (hence "hedge"). I do think there are some firms that have the skill to out-perform long term, but then the average is dragged down by ones like the subject of this article.
- ymolodtsov 2mo agoRentech surely exists but you can't become their LP, which allows the median hedge fund to exist, yes. As for the strategy, that's the idea but all of them market themselves on the returns first and foremost.
- literalAardvark 2mo agoNot really. Using leverage has risks that you're supposed to understand before you do it. It's not a free lunch, unless you're putting the sharks' interest ahead of yours. Or clueless, which was the case here, as L.A. is not a trader and has no business running a fund.
- quickthrowman 2mo agoToo bad for the people that were overleveraged? I don’t see why, they assumed too much risk and lost. This isn’t a WSB guy blowing up, it’s a collection of capital from sophisticated investors that understand the risks.