Einhorn fund down nearly 28% for first 11 months of 2018

[Handle123]

Most hedge funds play "themes"... like "oil up" or "RE down". They don't really "trade" all that much.

When their theme disappoints, they usually hold on.. maybe average down. And if it turns out they were waaayyy off in their theme, they take big losses. Not all that uncommon, actually.

What can we traders learn from him? Likely not much.

KISS, as always... with stops.

I agree, most won't learn, everyone thinks they are special have some wild bizarre gift of trading or investing. They take wild chances with ALUM, they seem to not be clear with term "Hedge", they make money even when they lose with the 2% management fee, yea they have to pay employees and keep the lights on. I seldom read where they have less drawdown than Indexes.

If they swinging billion dollar funds, no such thing as stops as they have to use Dark pools and get someone else to take other side. Instead of getting out, why not actually hedge with options on the Indexes or short index futures, at least they wouldn't have to get buried with double digit percentages losses, less they have to recover, and on move back up then buy calls. Or am I missing something here?

 

[Scataphagos]

I agree, most won't learn, everyone thinks they are special have some wild bizarre gift of trading or investing. They take wild chances with ALUM, they seem to not be clear with term "Hedge", they make money even when they lose with the 2% management fee, yea they have to pay employees and keep the lights on. I seldom read where they have less drawdown than Indexes.

If they swinging billion dollar funds, no such thing as stops as they have to use Dark pools and get someone else to take other side. Instead of getting out, why not actually hedge with options on the Indexes or short index futures, at least they wouldn't have to get buried with double digit percentages losses, less they have to recover, and on move back up then buy calls. Or am I missing something here?

Agree. You can't be hedged all the time, but if you've got positions which are difficult to unwind (size/liquidity), you can hedge them temporarily and limit future losses while things sort out. "Offsetting positions" may not be a "no brainer"... especially if your theme is waaaayyyy wrong. (Of course theme players who are getting stuck tend to rationalize, "my theme is correct.. my timing may be a little early, so I'll hang on or maybe even add to my position"). Maybe.

 

[schweiz]

Maybe these funds should change from hedgefund to edgefund.

The edge might work better then the hedge...

 

[zdreg]

Maybe these funds should change from hedgefund to edgefund.

The edge might work better then the hedge...

that is the point. they under perform because they have no edge. all edges disappear and reappear over time.

 

[schweiz]

that is the point. they under perform because they have no edge. all edges disappear and reappear over time.

They have an edge. But that edge works only for them, not for the fund. They call it FEES.

 

[cruisecontrol]

As a whole, retails also underperform? Who over perform?

ET members, amiright?

 

[ironchef]

Professionals talk in terms of risk adjusted returns. On a risk adjusted basis, perhaps he is doing great?

 

[maxinger]

Put simply, some lost 28%.

Also someone earnt 28%

 

[Handle123]

Agree. You can't be hedged all the time, but if you've got positions which are difficult to unwind (size/liquidity), you can hedge them temporarily and limit future losses while things sort out. "Offsetting positions" may not be a "no brainer"... especially if your theme is waaaayyyy wrong. (Of course theme players who are getting stuck tend to rationalize, "my theme is correct.. my timing may be a little early, so I'll hang on or maybe even add to my position"). Maybe.

Most of the dividend stocks bought in 2009, I remain long but hedged near highs using ES shorts besides long term systems been shorting since April 2016 and also hedge those attempts, it is constant balancing of hedges and also being short some stocks offset longs, then at supports buying calls as market dropping near supports, happily automation figures it all out now.

But when it comes to Hedge funds and many having Billions under management, getting in and out easily even with dark pools, bet it is tough.

I agree, many managers have some "idea" they got in cheap and take off, and often times I think they no better than first year traders "hoping" it goes their direction. I wonder if they have an "Uncle" area. I wonder when Buffet comes in and buys GM??? Gm needs to file chapter to reorganize and toss away excessive auto makers bennies, unions is killing them.

 

[Daal]

What is sickening about Einhorn is that his high water mark resets every year. So next year if he makes a few percent, he will be back at collecting 20% fees again. Its ridiculous