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Goldman Hedge Fund Gets $3B Bailout
- Thread starter S2007S
- Start date
How the hell did these funds lose up to 30% in the past month. Are these traders idiots. Every year the market goes up, then comes back in. They are supposed to be trading quantitative models, but the old addage garbage in garbage out applies here.
It's ridiculous. Anyone with some experience in the markets saw this coming back in June. The squeeze higher in July was the place to lock it in for the year. They are doing pairs trading, and arbitrage and still took losses, wtf? All I can say is that you don't have to be good at what you do to work at a billion dollar hedge fund. This proves PHD's couldn't get the markets to fit into their mathematical models in the past, and they still can't.
They must have been too cocky from the run up this spring, they forgot to keep the risk parameters tight.
It's ridiculous. Anyone with some experience in the markets saw this coming back in June. The squeeze higher in July was the place to lock it in for the year. They are doing pairs trading, and arbitrage and still took losses, wtf? All I can say is that you don't have to be good at what you do to work at a billion dollar hedge fund. This proves PHD's couldn't get the markets to fit into their mathematical models in the past, and they still can't.
They must have been too cocky from the run up this spring, they forgot to keep the risk parameters tight.
Even AQR's Clifford Asness got his balls ripped off as well.
Where do you think he used to work?
http://www.portfolio.com/views/blog...t-more-money-into-quant-funds?addComment=true
http://www.dealbreaker.com/images/pdf/AQRClientLetter_20070810.pdf
el surdo
Where do you think he used to work?
http://www.portfolio.com/views/blog...t-more-money-into-quant-funds?addComment=true
http://www.dealbreaker.com/images/pdf/AQRClientLetter_20070810.pdf
el surdo
Quote from ang_99:
I would love to see GS lose that 3 bill.
GS is not losing anything except potential management fees & % profit from that fund.
It's OPM, the best gig on the street. As long as there are suckers ready to give money to be managed by the key Wall Street Players, this will continue to happen. Who is taking the risk? Not GS. But who is making guaranteed profits & fees? GS.
Seems like a win-win for someone.
Quote from Hydroblunt:
GS is not losing anything except potential management fees & % profit from that fund.
It's OPM, the best gig on the street. As long as there are suckers ready to give money to be managed by the key Wall Street Players, this will continue to happen. Who is taking the risk? Not GS. But who is making guaranteed profits & fees? GS.
Seems like a win-win for someone.
Obviously you missed the call....GS is making a substantial investment in the fund!
Quote from mschey:
Obviously you missed the call....GS is making a substantial investment in the fund!
I think you need to re-read the original post. It's a group of investors led by GS. Which means little in terms of how much actual capital GS will put in from their own pockets.
How do you know where GS is getting the cash from? You think any shareholders will pony it up out of their own pockets?
My guess is that it's leverage among the players disguised as cash. Maybe commercial paper. Or some treasury stock sale.
Quote from Hydroblunt:
I think you need to re-read the original post. It's a group of investors led by GS. Which means little in terms of how much actual capital GS will put in from their own pockets.
How do you know where GS is getting the cash from? You think any shareholders will pony it up out of their own pockets?
My guess is that it's leverage among the players disguised as cash. Maybe commercial paper. Or some treasury stock sale.
I don't need to read a post, I was on the call. GS is making a substantial investment. They are basically doubling the fund to cut the leverage in half, around 3.5 to 1, and hoping the undwinding of positions is at least 75% complete, so they can weather the storm.
Quote from mschey:
I don't need to read a post, I was on the call. GS is making a substantial investment. They are basically doubling the fund to cut the leverage in half, around 3.5 to 1, and hoping the undwinding of positions is at least 75% complete, so they can weather the storm.
So in other words, it is complete guesswork where the cash that GS will pony up comes from, and exactly how much they will be putting up.