That is one brutal headline, the story not so much. And not nearly as harsh a judgement as "Marvell Technology Stock Jumps as CEO and President Resign"
From Bloomberg:
Shanghai hedge fund manager Li Bei says she learned quickly that the low-volatility approach to investing behind the rise of Bridgewater Associates was doomed in China for a startup like hers.
Steady returns did little to draw investors used to short-term rewards, so she put in her own money, cranked up leverage and produced an industry-leading 258% gain last year.
Li is a pioneer in macro hedge fund management in China, where homegrown firms are taking on foreign giants that are struggling to adapt in an industry where even low-fee mutual funds generate sizable returns. While her Shanghai Banxia Investment Management Center only manages about 500 million yuan ($76 million), she says firms like hers are best placed to assess how China is driving the global economy.
“We truly feel that Chinese funds have an obvious advantage judging corporate profits and commodity prices,” Li, 37, said in a phone interview from Shanghai. “For us, these are good times to make money.”
Chinese macro hedge funds made an average 41% return in 2020, four times the global level, according to data from Shenzhen PaiPaiWang Investment & Management Co. and Eurekahedge. The more than triple gain of Li’s Banxia Stable Fund put her firm at the top of rankings for such funds in China.
The stellar year promises to save Li from wounds inflicted by an exodus of investors in 2019 when her 9% return -- still beating an 8.9% global average of peers, according to Eurekahedge -- was dwarfed by local mutual funds during a bull market. The setback forced her to rethink her initial strategy of emulating Ray Dalio’s Bridgewater, an approach that she says included diversifying to limit volatility and providing free research to attract institutional clients.
‘Doesn’t Work’
“The Bridgewater route doesn’t work in China,” Li said. Offering two complimentary research reports a month didn’t help bring new money, and big institutions also balked at her fund’s small size.
When clients were pulling cash from Banxia Stable, Li put in some of her own, and added leverage of between 250% and 300%. The product, managing less than 200 million yuan, replicates asset allocations in her larger Banxia Macro Fund but increases exposure through margin-financed trades in instruments such as stock index and commodities futures.....
....MUCH MORE
I retold my favorite "Doesn't Work" story in June 2018's "On This Day: 70 Years Ago the Berlin Airlift Began":
....During the summer the two million people that the Brits and Americans were trying to feed could get by with two tons of coal per day (over the course of the airlift 80% of the weight hauled was coal) but as the blockade went on, it was apparent that the Sov's. intended to starve the city and it became imperative that an efficient method of delivering coal be found.
During winter the absolute minimum requirement was 3100 tons of coal per day. The little C-47's could haul around three tons per flight. The first week of the airlift, deliveries averaged 90 tons per day. The second week, 1000 tons/day.
It was decided to experiment with a low-speed, low-level drop of coal onto an empty field, the idea being that if it worked, B-29 Superfortress' with a 105 mph stall speed and 22-25 ton capacity would solve the problem.
On the appointed day the senior commanders went to the field, the plane came over, low and slow, dropped the coal, packed 100 pounds to a bag, the bags landed, exploded open, the coal was pulverized and a great black cloud of coal dust covered everyone watching.
One of the Generals, I forget if it was LeMay, Tunner or Smith, said "Doesn't work" and that was that.
When I saw the ag stocks open this morning I thought
"Doesn't work".
The logistics geniuses figured out what needed to be done, took 300 of the 400 10-ton capacity C-54's in the U.S. fleet, developed flight rules so efficient that the Germans called it "die Luftbrücke" (Air Bridge) and on Easter Sunday 1949 in a move to crush the Soviet's spirit, they decided to show off with the "Easter Parade".
In the 1440 minutes of that day, they flew 1398 flights into Berlin delivering 12,940 tons of coal.
The Soviets gave up the blockade the next month, two million people didn't starve or be forced to live under Moscow masters and thousands of kids remembered the candy bars the pilots would tie to handkerchief parachutes and drop as they came into Tempelhof....
It is a real asset to be able to say "Doesn't Work" and then act accordingly.
