What has changed since 2008 that caused veteran hedge fund managers to underperform and close shop?

[Q.E.D.]

In the US, the 4T on Fed's balance sheet means little. The paper purchased through QE is being held until maturity and then being extinguished. Compare to Europe. Dragi stated recently he will be reinvesting... IOW, the carried debt will NOT retire or extinguished. I pity the Euro currency.

Back to the US



No mis-direction there... you'd BETTER pay attention to (US and elsewhere) interest rates! Unlike the declining and eventually disappeared 4T debt on the feds balance sheet, the deficits created by the Washington morons won't expire or be retired in our lifetime, or our childrens lifetime, and require constant buyers for roll-over. This is why interest rate is crucially important. Alternatively, QE all over again, but with the short AND long term duration being bought. Don't you think that would make for some good times?

The 4T USFed balance sheet is less than 20% of the US deficit. The ECB and JCB do not compare. It's beyond stupid to think Yen is a "safe-haven" play. Still, I pity the Euro currency more.

http://www.usdebtclock.org/

We obviously have a different economic perspective. Mine is pure free-market Austrian economics, esp works by Ludwig von Mises. The Feds interest rate is of minor importance, compared the decline in balance sheet. The relatively minor drop the past two quarters is IMO, and others, is the cause of the stock market drop & volatility since January. All that occurred prior to Trump tariff tweets, prior to Fed meetings, etc. When looking at Central Bank balance sheets, you need to multiply number of times due to fractional reserve banking. Sorry, I won't continue this discussion; resolved decades ago, IMO. Probably not meaningful to you, but study the period in late 1920s, & esp Fed actions in 28-29, and then the next few years. Not to mention the idiot Greenspans actions starting in 1987.

 

[tiddlywinks]

We obviously have a different economic perspective. Mine is pure free-market Austrian economics,
...

The relatively minor drop the past two quarters is IMO, and others,
...

Sorry, I won't continue this discussion; resolved decades ago, IMO.
...

We can agree to disagree. There is no problem with that.
But I want to point out the dichotomy of your perspective... Austrian economics or opinion?

Good trading to you. Have a nice weekend.

When looking at Central Bank balance sheets, you need to multiply number of times due to fractional reserve banking.

study the period in late 1920s, & esp Fed actions in 28-29,

Weren't the 20's a period of Transactional Banking? With very little un-collaterilzed lending by banks? With few, if any government funded "welfare" programs? I also seem to remember the demise of the gold standard in the US and elsewhere as playing a big part in fractional banking. Could be wrong though. Anyway...

 

[Q.E.D.]

We can agree to disagree. There is no problem with that.
But I want to point out the dichotomy of your perspective... Austrian economics or opinion?

Good trading to you. Have a nice weekend.

Familiar with Austrian economics? Not opinion, which I could back-up both by the epistemological works, and specific economic theories. But I do agree that taking real time data, etc., is very difficult to fully & accurately identify/explain. In 5-10years, probably so, although many still disagree with cause of 1930s depression, not to mention the 1987 crash; the 2000 tech wreck; the 2005-08 stk & real estate boom/crash -- except the Austrian school. Their monetary explanation is fully consistent, IMO. But there are Austrian economists today who do disagree with current situation. BTW, although that is my eco perspective, I'm a technical trader, so if the mkt is declining, I'm short, as recently, although nice to have economic theory to support that.

 

[NoodleStrudle]

What changed? Very simple. The edge is gone. The edge sums up to this : illegal or gray zone market manipulation, insider trading, front running... Since some traders and hf mangers got sued ended in prison or were barred from the industry for many years black sheep have learned to avoid taking the risk of detection. Later we found out that was actually most of their edge if they ever had one. Look at Cohen. I am willing to bet this guy will never ever reach his past performance record. Too much scrutiny on his life and new fund and he can't afford to again get into trouble with the law. What else should be the reason for the performance declines we see across the entire board of finance?

What happened to Whitney Tilson is interesting. For the first 11.5 years of his hedge fund career, his returns through the period was 184% versus only 3% in the broder U.S stock market. Wonderful outperformance indeed. For the next 7 years since 2010, he trailed S&P500 index. 2017 was truly terrible. 2017 was a bull market for stocks. I expected it to be an idiot market where even know-nothing throw-darts idiots can make lots of money but Tilson lost 9%. I can understand if he was a trend-following CTA who lost money in other non-equity asset classes in 2017 but not when he invested mainly in equities. What was ironic that it was a 9-year bull market that finally killed him over the years.

This is all very puzzling. After 11 years of experience, his performance should improve further. Yet, it declined. Worse still, performance declined in a bull market??!! Why didn't the tailwind provided by a bull market helped veteran hedge fund investors like him? He is not the only veteran hedge fund managers who fail. Tilson is joined by Eric Mindich, Neil Chriss, Hugh Hendry, John Griffin who failed along with him.

What has changed in the stock market that cause these veteran hedge fund managers to fail so miserably in a bull market full of tailwinds?

https://www.institutionalinvestor.c...he-last-days-of-whitney-tilson's-kase-capital