How Experts Enable Corruption: The Role of Conflicted Lawyers at CalPERS and Other Public Pension Funds

As Trump is about to be sworn in, the press and pundits are agog about his and his fellow Cabinet members’ deep and extensive conflicts of interest, and how dangerous they is for democracy.1 But the hue and cry about conflicts of interest is late in coming. They’ve been tolerated more and more over time […]

Sears’ Death Spiral

click for ginormous graphic Today’s must read is a monster piece from Business Insider (again) headlined Inside Sears’ death spiral. Recall how many people a decade ago said “Eddie Lampert is a Retail genius.” They were half right; he doesn’t know jack about retail, but as BI shows, he knows how to be on both sides…

Read More

The post Sears’ Death Spiral appeared first on The Big Picture.

Dalio Interviewed by Blodget

Bridgewater’s Ray Dalio has been pushing back against the media portrayal of his firm; the latest is a skirmish caused by a recent WSJ article about the firm (his response was posted on LinkedIn). Henry Blodget of Business Insider — and a prior MiB guest — had a multi hour conversation with Dalio, by phone and by email Q&A.…

Read More

The post Dalio Interviewed by Blodget appeared first on The Big Picture.

Nine years ago today…

It was nine years ago today, Humble Student of the Markets was born. My first post at the time was entitled What exactly are hedge funds hedging? I went on to show that hedge fund returns were correlated with equity returns. That makes conceptual sense, because hedge funds are in the business of taking risk and equity risk is a major component of investing risk.




HFs are so 20th century...
Nine years later, hedge funds have done even worse than what I showed in 2007. Charlie Bilello showed that their returns have flattened out. They are no longer correlated with equity returns.


It could be argued that HFs are absolute return vehicles and therefore it is unfair to compare them against equities. Bloomberg showed that their performance against a balanced fund benchmark has been nothing to write home about either.


The market has reacted and the latest figures show that YTD hedge fund fund flows have turned negative. YTD redemptions are 77b as of October 2016.



Alpha is hard to find
My assertion back in 2007 that alpha is hard to find turned out to be correct. Many HF strategies, such as convertible arbitrage, long/short equity, event-driven, emerging markets, and so on, can be approximated by combinations of factors. In other words, you were paying for beta when you thought you were buying alpha. Since then, even those beta strategies have turned into...I don't know what as aggregate HFRX Indices have flattened out over the last few years.

The field is getting far too crowded to extract significant alpha. Back in the early 1990's, when swashbuckling managers like Julian Robertson and George Soros dominated the field, a billion dollar hedge fund was an enormous fund. Today, a fund with AUM that size just gets lost in the crowd.


Adding value to the investment process
I am not always right, but this is just an example of the value I have brought to the blogosphere and to the investment community.

We announced the Black Friday/Anniversary promotion nine days ago. We only have a handful of discounted annual subscriptions left at a price of US$199.99, which is US$50 off the regular price of US$249.99, for the first year. This offer is open to the first 100 subscribers, or until December 15, 2016, whichever comes first. Click on this link to subscribe and use the code anniversary2016 at checkout to get the discount.

Hurry before they're all gone!

The Return of the Repressed Critique of Rentiers – Veblen in the 21st Century

This is Naked Capitalism fundraising week. 1039 donors have already invested in our efforts to combat corruption and predatory conduct, particularly in financial realm. Please join us and participate via our Tip Jar, which shows how to give via check, credit card, debit card, or PayPal. Read about why we’re doing this fundraiser, what we’ve […]

New York Pension Regulator Shellacks State for Overpaying for Hedge Fund Underperformance, Enabling Private Equity Fee Secrecy

This is Naked Capitalism fundraising week. 794 donors have already invested in our efforts to combat corruption and predatory conduct, particularly in the financial realm. Please join us and participate via our donation page, which shows how to give via check, credit card, debit card, or PayPal. Read about why we’re doing this fundraiser, what […]

Are Endowments At “Peak Private Equity” ?

These are tough times for university endowments — there’s the difficulty of producing consistent results; the questionable love of investments in hedge funds and private equity amid high fees and underperformance; and the challenge of having to respond tocompeting constituencies. These issues are not going away anytime soon. If anything, they are becoming more pronounced…

Read More

The post Are Endowments At “Peak Private Equity” ? appeared first on The Big Picture.

1 2 3 39