This, and what has been going on the last few days, is not really a surprise.
How many of us have run across people you never heard of or never seen before calling themselves Hedge Fund managers?
When the meaning of words like arbitrage are changed and a new meaning is given which is much more dangerous. When just because you have a lot of money, you can be a successful venture capitalist, as if having the purchase price was enough to generate high returns. When just because there is a lot of money around, price doesn´t matter.
None of the losses are a surprise. Some of the names that are being hit may be a surprise.
When this episode washes through, we will see who are the good fund managers and investment bankers. The others should look for new jobs doing something else.
Hopefully, the central banks will stop bailing these out of their decisions! Moral hazard is alive and kicking.
Onésimo Alvarez-Moro
See article:
On Wall Street, there is a rage against the machine.
Hedge funds with computer-driven or quantitative investment strategies have been recording significant losses this month.
The managers of these funds are the products of the trading desks of the big investment banks, like Goldman Sachs and Morgan Stanley, both of which have investment operations that use computer models.
The cross-fertilization has raised fears among some analysts that it is not only the hedge funds that are being hit, but the trading desks at the banks as well.
See full Article.
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