hedge fund blow up !

I used to think they are much smarter than us and still feeling many clever guys are working on the Wall Street. But just be careful that there are also lots of sh**heads!
 
From Realmoney.com's columnist conversation:

Paul Kedrosky
1/24/03 12:15 AM ET

"The fund made three big, awry bets: NTT Docomo (short); NTT (long); and Sega (long to the tune of $150-mm)"
 
Quote from vhehn:
people think a "hedge fund" is some kind of easy way to riches. in truth you are still giving your money to somebody who could be an idiot to trade for you.
More...
Quote from mdl060374:
I guess my popint is that the term hedge fund is quickly losing credibility in my eyes as everyone is jumping on the bandwagon and forming their own...
More...
Quote from omcate:
IMHO:
People have short memories. Ego always wins. The collapse of two famous hedge funds: LTCM and D. E. Shaw in late 1998 are much bigger warning signs than this.
More...
Good points. And in regards to LTCM, it turned out that given a little more time, a few months, they would have made money on their positions rather than blowing up. This is undoubtedly why Warren Buffet was interested. He knew. They just couldn't handle the massive drawdown. And this is why a lot of hedge funds blow up. They don't correctly account for the range of possibilities of such drawdowns. And this is also true on the level of individual traders with much, much less capital. Many traders don't really examine and understand the true risks involved in the positions they put on. Like Mark Douglas would point out, everyone is so convinced they're right they don't plan for how they'll deal with possibly being wrong. They're so focused on how much money they will make if the trade goes as planned that they forget what can happen if it goes against them. As lescor's signature line says, "An amateur thinks about how much he can make. A professional thinks about how much he can lose."
 
Here's Mark Cook's story of blowing up his own account that should be required reading by all hedge fund managers and all full time traders for that matter. http://www.elitetrader.com/vb/showthread.php?s=&postid=157634&highlight=Mark+Cook#post157634
Also there's a book I just bought called, "When Supertraders Meet Kryptonite" by Art Collins that recounts the worst trading losses by people like Mark Cook, Linda Bradford Raschke, Larry McMillan, etc. The most important task in any trade is to protect your trading capital.
And from my own experience http://www.elitetrader.com/vb/showthread.php?s=&postid=158434&highlight=Managing+Risk#post158434
 
Quote from mdl060374:

I have always been under the impression that hedge funds were run by experienced wall street veterans with a long track record fo success for the most part.
With all the layoffs on wallstreet in the last 1 1/2 years, and more to come, I have heard of a bunch of traders lately getting together to "form a hedge fund"... It kind of scares me thast these people think they can pool their $$ and others $$ and make a go of it in this type of market. Most of these people know nothing of risk mgt. and aspects of portfoliko mgt,

I guess my popint is that the term hedge fund is quickly losing credibilty in my eyes as everyone is jumping on the bandwagon and forming their own...
More...

In 2001, the hedge fund business was so hot that the industry employed a lot of traders without real trading experience.

:( :( :(
 
in this light. Correct me if I am wrong, but as far as I recall he did not blow up his fund, but simply did not deliver as well as he was expected to in 1987 (?) and then simply closed it down.
 
Quote from nitro:


The "hedge" in Hedge Funds is a misnomer. I would say that less than half of all "Hedge" Funds are Long/Short Neutral, let alone more complicated hedged strategies.

nitro
More...

I know it, I guess my sarcasm was not explicit enough...
 
You must log in or register to reply here.
Back
Top