tag:blogger.com,1999:blog-35316766.post1763890418498259735..comments2023-11-03T09:17:54.879-04:00Comments on The Perplexed Investor: Hedge Funds and Systemic Risk - Conclusion (III)Leisa♠http://www.blogger.com/profile/10237875938400587600noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-35316766.post-58543653115239378102007-08-21T00:56:00.000-04:002007-08-21T00:56:00.000-04:00I forgot to say that during last week there were l...I forgot to say that during last week there were lots of 'experts' in the media trying to explain what happened, with many poor attempts to try to explain the meaning of the term sub-prime.<BR/><BR/>The consensus seemed to be that the sub-prime crisis should not have an effect on the norwegian market. Yeah, right... I think we saw that...Unknownhttps://www.blogger.com/profile/16636701457315103747noreply@blogger.comtag:blogger.com,1999:blog-35316766.post-69698796863695246182007-08-21T00:52:00.000-04:002007-08-21T00:52:00.000-04:00Interesting material. I will read the source artic...Interesting material. I will read the source article as soon as I have time. <BR/>I'm just going on my third year as a finance student and still have a lot to learn. But the points on phase-locking which you mentioned; how un-correlated financial instruments suddenly become correlated at the ocurrance of an 'event' really caught my attention. Pretty much all you learn in school is based on markets moving in long-term stable trends, and so are all the mathematical models we use for quantifying risk (non-systemic risk that is). And when one of these 'events' occur, it's not about unsystematic risk anymore, since everything correlates with everything else.<BR/>I’m not saying that it’s not relevant. 95% (or whatever) of the time, this is the reality we have to deal with. The point is that anyone can make money in a bull-market (or at least avoid huge losses). It’s when it turns that the good investors will separate themselves from the not-so-good. And they will do that because they have a different, more fundamental understanding of the dynamics of the markets, it’s not their understanding of mathematical models and formulas that will help them diversify away their losses when the big bad bear comes around.<BR/>I thoght I had a point coming, but I guess I didn’t... Still, not too much research out there on Hedge-funds. I was thinking asking my professor if I could do some work on the subprime crisis and its possible effect on MBS, CDO’s, Hedge funds and the global capital markets.<BR/>Reading Bill’s blog for some time, I’ve been pretty well informed on the sub-prime mess for some time, but in Norway, where I live, it’s only gained attention quite recently.Unknownhttps://www.blogger.com/profile/16636701457315103747noreply@blogger.comtag:blogger.com,1999:blog-35316766.post-78717915479723075802007-04-14T22:02:00.000-04:002007-04-14T22:02:00.000-04:001) It almost seems that hedge fund managers have g...1) It almost seems that hedge fund managers have gotten kind of lazy. <BR/><BR/>a) If you're compiling a fund of funds, then presumably you need only come up with some kind of model that allows you to identify the best-performing managers/funds, and you "bet the jockeys" (again, as Bill would say). [And I can certainly see the potential for correlation here.] <BR/><BR/>b) Diversifying among a number of small non-public companies with high growth potential. Hmm. I guess these are opportunities closed to the average investor, but probably land in volume on the desks of the average hedge fund manager. That might be one reason to give 20% of your profits to someone.<BR/><BR/>c) Investments in real estate funds with exposure to loans below investment grade quality. Again, a) you're picking funds, and b) you might as well open your own sub-prime loan subsidiary. And it seems like some of them have.<BR/><BR/>2) "The hedge-fund industry has grown tremendously over the last few years, fueled by the<BR/>demand for higher returns in the face of stock-market declines and mounting pension-<BR/>fund liabilities." Take on more risk when you're losing money to try to make it back? It's gratifying to see that human nature doesn't change much at the top. <BR/><BR/>I think you made a good attempt to understand the risks posed by hedge funds. Many of them use methods (notwithstanding their "sophisticated risk management techniques") that either plagiarize or amplify bets being taken by others. And when it's the wrong bet...<BR/><BR/>Thanks for taking the time.<BR/><BR/>2nd_aveAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-35316766.post-83464515805802881582007-04-13T16:55:00.000-04:002007-04-13T16:55:00.000-04:00Deares Anonymous: And with regard to these filing...Deares Anonymous: And with regard to these filings you have what in mind? (g).<BR/><BR/>Presuming that you are the same Anon that referred the 'Greenspan Put' which I did complete, but I confess to glossing over the equations!Leisa♠https://www.blogger.com/profile/10237875938400587600noreply@blogger.comtag:blogger.com,1999:blog-35316766.post-723713520510345582007-04-13T05:28:00.000-04:002007-04-13T05:28:00.000-04:00So how about you cast your eye over the these when...So how about you cast your eye over the these when you have time and inclination.<BR/><BR/>http://www2.goldmansachs.com/our_firm/investor_relations/financial_reports/docs/2006_Form_10-K.pdf<BR/><BR/>http://www2.goldmansachs.com/our_firm/investor_relations/financial_reports/docs/Y31582_11_GS.pdfAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-35316766.post-37051017949003748362007-04-12T18:25:00.000-04:002007-04-12T18:25:00.000-04:00"So why choose The Hartford with your hedge piece?..."So why choose The Hartford with your hedge piece?" Only to illustrate that that financial institutions were using these vehicles to increase yield.Leisa♠https://www.blogger.com/profile/10237875938400587600noreply@blogger.comtag:blogger.com,1999:blog-35316766.post-88834990657253820312007-04-12T17:09:00.000-04:002007-04-12T17:09:00.000-04:00So why choose The Hartford with your hedge piece? ...So why choose The Hartford with your hedge piece? Small hedge exposure in total investments (though had a negative impact on yields last year) and some being distributed to customers. Ex-marketing makes one wonder why they bother.Anonymousnoreply@blogger.com