Hedge Funds Shut as Managers Struggle in Year of Two Percent Returns

I was really surprised to read this, i guess even hedge funds can't play in this manipulated game they call wallstreet....
 
I think the historical statistics are pretty clear. you can get it from Vanguard or Bogle. 85% of all managed funds underperform the index. Of the 15% who do out perform, only 5% outperform for 5 years consistently. If you think you are good enough to pick the manager who will out perform the index for 5 consecutive years be my guest.

my guess is the 2/20 paying uneducated investors just can't imagine coming out ahead by investing like a commoner in an index fund. Meanwhile what they could have made by just going long the index is getting eroded each year in expenses just to make themselves feel good.
 
S2007S said:
I was really surprised to read this, i guess even hedge funds can't play in this manipulated game they call wallstreet....
More...

It is not manipulation. It's business. Banks take the other side of your bet or the bet of the hedge fund because the bank is doing it for profit. Why should there be expectations that the bank will give you their money ? If you were running a business, you will be no more inclined to give your money to your customers than the bank would theirs.
 
I am totally ignorant--please enlighten me. All anyone had to do for the last 2 years was stuff a bunch of blue chips into their mattress. Even a blind hog could make money. What is the deal?
 
drcha said:
I am totally ignorant--please enlighten me. All anyone had to do for the last 2 years was stuff a bunch of blue chips into their mattress. Even a blind hog could make money. What is the deal?
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Yes, it's true that blue chips had a great run. My guess is the hedge funds in question made very concentrated bets on a specific theme, and if those trades went sour, then the losses mounted to the point where they had to close.

In fact, the article quoted mentions a few funds that made bets on oil, special situations and distressed credit, and a firm that traded based specifically on computer models lost money.
 
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drcha said:
I am totally ignorant--please enlighten me. All anyone had to do for the last 2 years was stuff a bunch of blue chips into their mattress. Even a blind hog could make money. What is the deal?
More...

Right, but everything looks easy in hindsight. The problem is looking forward. A fund could follow the same rule for the next year and not have the same luck.
 
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