It is all about liquidity…
Over the last few years, Wall Street’s leaders have changed from independent thinkers to drones marching to Washington’s drumbeat. The many who criticized the Street in the wake of the credit crisis, fueled by the failure of Bear Stearns, Lehman Brothers and Merrill Lynch, scared the Street into mediocrity. The resulting companies are massive behemoths bogged down by regulation and led by fearful supervisors who see little room for independent thinking. A giant sucking sound has replaced innovation over the last seven years, but instead of Mexico filling the void, as Mr. Perot believed, hedge funds are doing the job. Hedge funds, you see, are the last great bastion of […]
It is clearly not over.
Just when you thought they were out, they pulled investors back in. According to recent data from HFR, hedge funds had a great month in January, beating equities and delivering significant positive returns. Just a month ago, the media were asking if hedge fund managers still had it after performance in 2013 did not match the broad market index. The industry, according to these experts, was in big trouble. Wrong again! Comparing investments that go long and short the market to investments that only go long is like, well, comparing apples to oranges. Simply put, if managers are hedging, then they should not beat the market in an up year. […]