Die hedge funds die. They can’t implode soon enough.
Though the Wall St anarchists bear more responsibility for the derivatives mess. The 8 trillion dollar bailout may be bogus but most of it is an effort to contain the credit default swap and derivatives mess. Not so much the sub-prime mess
I run a (very small) “hedge fund.” All it means is that I will go long as well as short, will use options as well as futures, and state in my initial interview with clients “don’t give me your money if you aren’t prepared to lose 50% of it, or ALL of it if everything goes south at once.” If the fund loses 50%, I liquidate it and send them a check. I have been down almost 30% at one time, but never a forced liquidation. It is also on the rules that you can’t get your money back unless it is the Jan 1, and you have to notify me by Sep 15. Your losses are yours. Your gains are 30% mine. I make no moneys from funds under management. I also don’t take money from people I don’t know.
I am down 7% this year, after being up by over 46% before the PM collapse. I have been short banking stocks since March, and shorted the living pooh out of WAMU, Citi, and Fannie Mae.
I have only had two customers want their money out, but it was mid October, and I told them they would have to wait until next year, (I don’t want to establish precedents).
I think I am good at what I do. I expect to close out the year with my clients in the black, although minimally so.