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fars1d3s
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When are we going to see hedge funds blow up?

September 19th, 2008, 5:22 pm

Is it possible that some hedge funds actually thrive and are profitable because of this crisis ? At least mine is. I made some short bets on EUR/USD and US treasury notes this week and today I am doing just fine. I am sure there are other players who bet short against the overbought US treasury notes this week.You need to be positive.
 
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mencey2
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When are we going to see hedge funds blow up?

September 19th, 2008, 5:43 pm

I am curious about this one, ...........................................did we saved GS and MS at the cost of a bunch of HF?
 
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Traden4Alpha
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Joined: September 20th, 2002, 8:30 pm

When are we going to see hedge funds blow up?

September 21st, 2008, 10:22 am

QuoteOriginally posted by: mencey2I am curious about this one, ...........................................did we saved GS and MS at the cost of a bunch of HF?I doubt that. Most HF are highly dependent on the IB-created financial system. If the IB's die, the HF die too.The bigger issue is the potential collapse of counterparties and both the OTC and exchange markets. HFs can't survive if their profitable positions end up being worth nothing because the counterparty is in bankruptcy. And most HFs can't survive if they are forced to go to 1:1 leverage because no one is lending any money.
Last edited by Traden4Alpha on September 20th, 2008, 10:00 pm, edited 1 time in total.
 
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mencey2
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When are we going to see hedge funds blow up?

September 21st, 2008, 12:04 pm

you are right, but I was referring to the banning of short selling
 
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Martinghoul
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When are we going to see hedge funds blow up?

September 21st, 2008, 1:56 pm

The reason broker/dealers got spanked was their business model, which relies on systematic borrowing from external funding sources. By the same token, it seems that deposit-taking institutions (like integrated banks) will be OK. Hedge funds take deposits, which means they do not necessarily get painted with the same brush as the broker/dealers in the crunch. Whether HFs get "crunched" for a bunch of different reasons remains to be seen.
 
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trackstar
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Joined: January 1st, 1970, 12:00 am

When are we going to see hedge funds blow up?

September 30th, 2008, 11:25 am

Two notes:Reporting of Shorts to Start - Sept 29and Hedge Fund Redemptions Up in Asia - Expected ElsewhereArticle notes that Sept 30 is deadline for investors in funds that offer monthly or quarterly redemeption requests. Counterpoint: bargain hunters are alive and well too.Mobius after Russian Market Decline - BloombergA quote from Andy Lo, (Lab for Financial Engineering, MIT) on hedge funds:"...the hedge fund industry is the Galapagos Islands of the economy because of the remarkable speed and clarity with which evolution occurs...I believe that a new theory of economic dynamics will eventually emerge from the study of hedge funds."
Last edited by trackstar on September 29th, 2008, 10:00 pm, edited 1 time in total.