WWTBAM Bored

I am on a little kick on reading about Hedge Funds. I have very little respect for that world.

I noticed that their trades or positions are almost always referred to as "Bets." Play a Google game if you want -"Hedge Fund Losses"-"Hedge Fund Gains" or whatever.

I have yet to see a position referred to as an "Investment."

Doesn't ring of confidence.

They're just being honest, in their language though not in their dealings. Any institution that does not give you a guaranteed payment (interest at an FDIC bank is guaranteed, pension funds are supposed to be guaranteed, but institutions have a way of weaseling out on them by claiming insolvency) is only betting with your money.

I think this is my favorite example so far.

http://www.cnbc.com/2016/08/15/teppers- ... arter.html

As I have said in other threads-I (in Dad's IRA) am overweighted by choice in energy stocks. 2015 was a bloodbath in those stocks, however, they have come back very nicely in 2016. I actually pulled a little oil money off the table a week ago-Sometimes when the market gives you a 300% increase in a particular stock in a few months-you just have to take some.

My personal favorite stock (EOG) in the portfolio constitutes about 20% of the total and has risen about 35% since the January 16, 2016 lows. Most interesting is that it has risen 22% since August 1, 2016-the other energy stocks in the portfolio also have risen similarly in the same timeframe.

Note that the Appaloosa fund dumped their energy stocks in the second quarter-Meaning, they probably rode them down in 2015-sold at a relatively low time in the year and missed the 3rd Quarter bump. My God, why do these people get paid?

Spock wrote:My God, why do these people get paid?

They not only get paid, but they get paid very well for their efforts. Hedge fund fees are considerably higher than mutual fund fees, meaning it's much tougher to make a profit, and, over time, those fees really cut into returns. There are also waiting periods on pulling money out of a lot of them which makes it difficult to bail when things go badly.