Don't put your faith in hedge fund titans
I know the headline is a double negative but it's something I've repeated often since markets began to melt in 2007. The analysts and managers watch the market, watch to CNBC and repeat the same things everyone else is saying.
Reuters reports from a three-day hedge fund forum in Palm Beach that left investors underwhelmed.
Investment ideas presented were largely familiar, including so-called bearish views on China, commodities and stocks.
"I'm disappointed by their attitudes - they seem resigned and disappointed," said one hedge fund allocator and longtime event attendee who was hoping for more novel investment ideas. "No one is really excited by anything."
This part of the story is particularly telling:
The average hedge fund, as represented by the Absolute Return Composite Index, fell 0.16 percent in 2015, the third losing year in less than a decade.
"It takes someone very special to earn the high fees," said one representative of a wealthy family. Hedge funds typically charge a 2 percent fee for assets managed and keep 20 percent of profit generated.
The person added that they had been slowly paring back their allocation to hedge funds and poor performance in 2015 only underlined the logic behind the move.
"These 'brilliant' guys," the person said, "got tossed around like toy boats in a hurricane."
Read the news, analyze the charts, get a sense of what the crowd is doing, but make your own decisions and your own trades. If you want hedge fund-type performance, you'll beat it with an index fund.
