Hedge funds have been in the news more than ever in the last few weeks and I think the coverage has been fascinating. When news of the crisis in Greece broke, the articles about career-making trades by hedge fund managers shorting the Euro were page 1, column A.
Just a few weeks later, the articles about how good a year 2009 was for hedge funds, both in terms of performance and new assets, was just below the fold on page 1.
This week a study found that hedge funds are going to attract more than $220 billion in new assets in 2010. Stop the presses: “Hedge funds, the cause of the crisis, are now making money hand over fist” is the new headline and the ink is flowing.
No matter how hard the powers-that-be try, they cannot kill this industry.
Hedge funds, as I have said before, are here to stay. This industry will not die. No matter what level of regulation Congress passes, or how tough things get with state regulators, these investment vehicles are here for the duration. The train has left the station with lots of investors on board.
The reason is simple: Investors, rightly or wrongly, believe that hedge fund managers actually know what they are doing when it comes to making investments. The people who allocate massive sums of money understand that you need to be “in it to win it.” Hedge funds, simply put, are winners. And everyone likes a winner — even when they lose.
Still, the hedge fund industry is facing some tough times in 2010 and beyond. Once the President and Congress move past the health-care debate and begin dealing with the job problem, their sights will be turned on hedge funds. The regulation, whenever it comes and whatever form it comes in, will be good for the industry; it will establish a level of credibility and the industry will thrive.
If investors send $220 billion to hedge funds in 2010, think of the numbers that will flock to the managers in 2011, 2012 and beyond.
It is clear from recent news reports that people don’t understand how hedge funds work. They don’t understand how hedge funds operate. They don’t understand how hedge funds make money for their investors and they don’t understand how hedge funds bring liquidity to the markets. I’m excited about what’s happening in the industry and by its prospects. Stay tuned, the fun is just beginning.
HEDGEAnswers Conference Call Update:
On Tuesday, we concluded the 2009-2010 series ofHEDGEAnswers Conference Calls. The five-part program allowed people to ask questions and get answers about how to create, operate and build a successful hedge fund organization. The calls were well attended, the information exchange was strong and people actually learned something. The next series of calls, for those wanting to launch, build or expand a hedge fund business, will begin in September. The schedule will be out shortly. In addition, we are going to offer a new program called HEDGEAnswers – The Strategy Sessions. Information will be available onwww.hedgeanswers.com in the next few weeks. Be sure to check it out.
THINGS THAT DRIVE ME CRAZY
Complainers drive me crazy.
Recently, I learned of two devastating situations. One is a friend whose wife suddenly died of a pulmonary embolism, leaving him and his two children, 2 and 4. The other is a friend from college whose sister-in-law was diagnosed with a massive brain tumor and is six months pregnant with her first child. I know times are tough, the economy stinks, taxes are too high, your basement is flooded, gas is expensive, the kids are crying, your parents are annoying, you don’t have enough money, and you have no time for anything. Well ,guess what: Stop complaining, hug your kids, spouse, parents, friends and be thankful for today because you never know what tomorrow will bring.