Tudor suspends withdrawal

Quote from Pa(b)st Prime:



A carry trade-whether it's capturing currency yield differentials or borrowing at 2% and lending at 6%- is an identical risk profile to a short put on the spread. The "premium" collected is the yield diff. Leveraged of course. I used to look at returns and think, "how can these guys be so friggin' good". Now we all know it was Russian Roulette......
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The thing that's mos annoying about the carry trade is that so many people think it's arbitrage.

It's a bet on the slope of the curve or a straight up currency bet. What it's not is an arbitrage. It isn't even stat arb because if you hedge it, you will make no money. There's no alpha.

These guys looked so good because they were winning in their trades and the ones that weren't went belly up and didn't advertise their failure.
 
Quote from Daal:

how would you know one has a 'proven edge'?track record is not sufficient. I thought Ospraie LLC was a great fund to invest. the guy was seeded by tudor jones and mentored by Julian R. had a good record of 8 years or so including a recession, yet he fell in love with his research and his plan in the case of a global recession was to go under. If the guy has a HUGE track record then chances are you need huge amounts to get in

Picking hedge funds is like picking stocks in a market with huge commission costs, if you are good at that chances are you can do all the trading YOURSELF
All that performance of hedge fund indexes are gone now that global assets are going down, why on earth would one pay 2/20 to be long of assets taking the risk of blowups?
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I agree. For managers with a <10 year track record, if you are good enough to distinguish between luck, leverage in a rising market, and skill, then you are good enough to pick stocks yourself.

IMO it is *easier* to pick stocks than to pick skilled managers with <10 years track records. Add in a 2% annual drag, and 20% of profits on top, and it's a monumental hurdle. Finally, if you *do* find one obviously good, he either requires a huge minimum investment, is closed to new business, or managing such a huge amount that he can't keep his returns as high as before, or just gets lazy with success and blows up or cranks down the size to gather assets and take his risk-free 2%.

Far better to just use sector ETFs and go long whichever sector you would have invested in anyway, and take 10-20% of assets and make selected punts trying to find the new Dell Computer.
 
Quote from Pa(b)st Prime:

It wasn't until I read Fooled By Randomness that it hit me bro. An overwhelming majority of consistently successful hedge funds were merely de facto short option premium.

A carry trade-whether it's capturing currency yield differentials or borrowing at 2% and lending at 6%- is an identical risk profile to a short put on the spread. The "premium" collected is the yield diff. Leveraged of course. I used to look at returns and think, "how can these guys be so friggin' good". Now we all know it was Russian Roulette......
More...

And as we are seeing in 2008, that argument could even be applied to many so-called value investors too. Basically their 'cheap' stocks are cheap - so long as there isn't a killer recession or financial meltdown. If there is one, the cheap stocks turn into value traps, go to $1 or even $0, and the value guys blow up. At least with them it's only once every 30 years that they get totally raped, not every 5 years like the leveraged hedgies.

Ben Graham lost 85% from 1929 to 1932. And check out the value managers in 1973-74, they got slaughtered.
 
Quote from Cutten:

Ben Graham lost 85% from 1929 to 1932. And check out the value managers in 1973-74, they got slaughtered. [/B]
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where did you read that ben graham lost that much?
 
Quote from traderbee:

where did you read that ben graham lost that much?
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It was a transcript from James Grant about Ben Graham. By the end of 1932 he was down 70% but at the peak he was down 85%.

Then again, part of the reason was that he used leveraged. If he had invested for cash, he would presumably have lost maybe half as much, so down 42.5% at the nadir in 1932, which is a lot better than the general market (down 89%) but still a pretty horrific result
 
Quote from Cutten:

And as we are seeing in 2008, that argument could even be applied to many so-called value investors too. Basically their 'cheap' stocks are cheap - so long as there isn't a killer recession or financial meltdown. If there is one, the cheap stocks turn into value traps, go to $1 or even $0, and the value guys blow up. At least with them it's only once every 30 years that they get totally raped, not every 5 years like the leveraged hedgies.

Ben Graham lost 85% from 1929 to 1932. And check out the value managers in 1973-74, they got slaughtered.
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Thats interesting fact from James Grant. Would anyone be surprised that happens again this time? I wouldnt be
 
Quote from Anaconda:

Reporting hedge fund returns is a science of its own.
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the reporting requirements, or lack therof, makes them much more 'black box'

the entry requirements make them far more 'cant enter unless you can afford to lose'

as for as the 'value investors' go, if there is a structural change in the economy, p/e means absolutely nothing
 
great contributions -with core trader sentiment.

I have to admit while I am pretty cynical (about these funds) I will be surprised if it turns out Tudor was "marking to profit" semi toxic assets.
 
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