I'm old enough to remember when hedge funds got their name, by also shorting (or hedging) stocks. The idea was the highly paid genius managers could make money for clients in bull AND bear markets. Good in theory, but the short holdings killed performance during 50 years of generally rising stocks. Today hedge funds don't do much shorting.(only IHUBers think shorters are everywhere)
Nowadays hedge funds market themselves as ways to get "uncorrelated" returns. That is, investing so peaks and valleys are unrelated to the movement of stocks and bond. They are supposed to reduce portfolio volatility without reducing performance. Hedge funds have failed to do that in recent years. Hundreds of them shut down in 2015.
I think there is an element of snob appeal in hedge fund marketing. High fees and exclusive membership appeal to a few investors. Note how Bernie Madoff often REJECTED new investors, at least for awhile. That guaranteed that his "marks" would brag to their friends when Madoff finally agreed to accept their money. LOLOL!
I'm a qualified investor and could invest in hedge funds. I have no desire to do so.
Want to invest in a damn good hedge fund? Berkshire Hathaway is very close to being one without the exorbitant fee structure. It has outperformed every hedge fund I'm aware off. Plus it's easier to get money out of BRK.
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Because the Good Life is Just a Pump or Two Away
AI
