Breet Arends in
Market WAtch writes:
Hedge funds are scary. They are complicated, confusing and risky. If you’re a rich investor — the member of a wealthy family, say, or someone running a big endowment — you need someone to help you pick the right ones and avoid the disasters.
To help you out, we’ve assembled two teams. On the one side we have assembled a highly professional group of investment advisers running a “fund” of hedge funds.
The team will greet you in their beautiful offices on the waterfront in Greenwich, Conn., or maybe Palm Beach. A beautiful secretary will serve you a beautiful cappuccino with just the right amount of cinnamon and nutmeg on top.
The members of your team boasts MBAs from Harvard and Stanford, and resumes packed with blue-chip names from Wall Street. They have wonderful PowerPoint presentations to show you how they will help you manage your money. They will impress you with their strict, “disciplined” investment process. They are tough on “alpha,” “beta,” and risk-management controls. They check out each fund thoroughly.
On the other side we put together a group of monkeys kidnapped from the local zoo. They hang off a tree while we feed them peanuts and bananas.
Which investment approach does better?
I'll not spoil the story by telling the result.
22 comments:
It depends on the monkeys' management fees.
(Normally, however, if you pay peanuts, you do get monkeys).
Anon.
The point is that the monkeys provide better service for peanuts and an occasional banana.
In America.............Monkey's already pick stocks, only we call them "Financial Advisors".....
The one pictured above is called "Corzine" and he has been a Very, Very Naughty Monkey.
He will have to sit in the corner for a Very Long Time.
Anon.
Regarding Corzine, he bet MF on Europe's financial health. "As of last week, MF had amassed net exposure of $6.29 billion in debt issued by Italy, Spain, Belgium, Portugal and Ireland. Of that, $1.37 billion was from Portugal and Ireland, which already were bailed out by European authorities."
MF Global Holdings Ltd. collapsed into bankruptcy Monday when a potential buyer bolted over a discrepancy of hundreds of millions of dollars in the beleaguered securities firm's books, people familiar with the matter said.
Sorry. The latest news are that it was not bad investment strategy that broke Corzine. It may have been simple "discrepancey".
"U.S. regulators are investigating the discrepancy, which relates to money from customers that couldn't be accounted for as MF Global raced to sell itself, according to people with knowledge of the probe. The probe is at an early stage, and it isn't clear if the money is missing or if the inconsistencies relate to sloppy bookkeeping."
MF Global Holdings Ltd. collapsed into bankruptcy Monday when a potential buyer bolted over a discrepancy of hundreds of millions of dollars in the beleaguered securities firm's books, people familiar with the matter said.
Sorry. The latest news are that it was not bad investment strategy that broke Corzine. It may have been simple "discrepancey".
"U.S. regulators are investigating the discrepancy, which relates to money from customers that couldn't be accounted for as MF Global raced to sell itself, according to people with knowledge of the probe. The probe is at an early stage, and it isn't clear if the money is missing or if the inconsistencies relate to sloppy bookkeeping."
MF would not have been in that position if Corzine had behaved in a prudent, non-expansionary way.
He risked it all on a very dangerous bet.
Miss Koko has taken away his banana, slapped him on the wrist and put him in the corner with a dunce's cap on.
He will be there for at least 10 minutes, and then will solicit money from the Occupy Wall Street crowd for his new hedge fund.
Anon.
The missing money was only discovered because the firm was already on the verge of collapse. It was the huge exposure to Euro debt that undid the firm. Their bet might have even been right (and very profitable) if it had been allowed to run, but the regulators and the rest of the market were not willing to deal with a firm that had an exposure far in excess of its capital.
Corzine forgot that he was not at Goldman Sachs anymore, which was in a position to make such large bets not only because of its greater capital but also because no one would dare challenge them on the "too big to fail" principle. We are in a situation now where gains are privatized and losses are socialized - heads I win, tails you lose.
K
Basically, it was the regulator (the Government) that destroyed Corzine.
We are all playthings in the hands of regulators.
There is no name for this new regime. Statism? Technocracy? Marxism?
It is opressive for sure.
Incompetentocracy?
K
Actually it was the absence of regulation that destroyed Corzine.
Not only was he making reckless and stupid bets, he was co-mingling client money and firm money, which is Not Allowed In The Primate Enclosure.
The idiocy of trusting Southern Europeans to actually honour their undertakings to live by conditions imposed by Northern Europeans has now, only today, been fully exposed. Even in the atmosphere of ludicrous optimism after the "deal" last week, it was too much to believe, even for the globalists who populate Wall Street; so they called him on it.
As he embarks on his next hedge fund, Corzine would do well to study Human Biological Diversity. Which is a pity, since it is not a subject on the curriculum anywhere he went to school (St Hillary's College).
Anon.
Corzine is planning his public relations campaign prepatory to launching his new hedge fund. He hits upon a little jingle:
'A sucker's born in every minute.
This is how I'm going to spin it!
It wasn't me who stoppped the rules
Why not separate $ from the fools?'
Anon.
http://pointsandfigures.com/2011/11/03/new-words-ineptocracy/
I like my word better.
K
1. Ineptocracy
*_Ineptocracy_****(in-ep-toc’-ra-cy) – a system of government where the least capable to lead are elected by the least capable of producing, and where the members of society least likely to sustain themselves or succeed, are rewarded
with goods and services paid for by the confiscated wealth of a diminishing number of producers*
I am not 100% satisfied with the definition. It describes a situation but it has no ideological basis like "Marxism" or "Free Market" etc.
Is there any relevant definition ending in "..ism"?
Incompetentocracy is not strongly tied to any coherent ideology, except maybe a vague ignorant leftism/sense of resentment against those who have done better than you. This doesn't even rise to the level of Marxism or "scientific socialism", which at least required some thinking (even if the thinking was wrong). This is more like classical anti-Semitism - "the socialism of fools".
K
I have subcontracted the writing of the ideological fundaments of "Ineptocism" to a friend in the country club. He used to be party philosophist in the old Soviet Union, charged with updating Marxism and making it relevant to modern world (of the seventies). He will demonstrate why ineptocism is the inevitable result of post-capitalism when the socialist alternative has been exhausted.
Someone will have to translate it from Russian.
Occam's Razor says that rather than ineptocism being the inevitable result, blah, blah, blah, it's just that these people are as dumb as rocks. We've created a system where rather than rewarding competence and experience (neither of which Obama had), we reward people for having the right color skin, the correct gender, the correct expression of politically correct conventional wisdom, etc. You get the government that you deserve and Obama (and Pelosi and Reid, etc.) is what we deserved.
Yesterday I was at the supermarket in the ghetto (much nicer that the supermarkets in my wealthy area) and the woman in front of me bought $300 worth of groceries, two full shopping carts worth, all paid for by food stamps. I'm an alleged member of the middle class - I would never spend that much on food, but I had to pay for this woman (and 45 million others, including it seems the entire population of West Philadelphia - I've never seen anyone pay in this supermarket using anything other than food stamps) to go to town with my money. Something is wrong. Seriously wrong.
K
K,
What you are describing is not inepticism, it is socialism. People under socialism is classified by class origin and those from peasant/worker origin get preferential treatment, while those burgeois have a hard life.
In all regimes, those in power favour their supporters. In the USA the ghetto people is in power and they are enjoying the fruits of the victory in their political struggle. Obama, a community organizer (something like a ghetto leader) is the President.
It will be difficult to dislodge him.
There was always a tension between democracy and capitalism (this is why the US form of government is supposed to be a republic, not a democracy). How do you keep the bottom 51% of the population from voting themselves the wealth of the top 49%? In the past there were constitutional safeguards but these have been eroded over time, starting with Roosevelt, who was a traitor to his class.
K
Post a Comment