Thursday, June 5, 2008

HEDGE FUNDS NEED LUCK MORE THAN TOOLS

From Dow Jones Financial News via Fintag:

Almost a quarter of hedge funds were shown by the credit crisis to be trading on their luck, according to a risk management consultant.

Olivier Le Marois, chief executive of French consultant Riskdata, which made the claim, said technology could develop tools to help people make investment decisions, but it could not replace their skills.

Le Marois' firm has published a study of 3,216 hedge funds and funds of hedge funds—about a third of the estimated 10,000 such funds operating globally.

It found that 729, or 23%, experienced unusually heavy losses over the nine months between the start of last July and the end of March.

Le Marois said: “Nothing in their record of monthly returns up to that point could have alerted an investor to such a high level of losses. They had made good returns through luck. They were time bombs waiting to explode.”


Fintag says
I couldn't agree more. It comes down to having good teeth and the ability to close deals whilst stuffing dollars down pole dancing ... [Editor: Steady]