The blog is back. That’s right, ladies and gentlemen, boys and girls, children of all ages, the blog is back. I have taken a little bit of a hiatus over the last few months because I have been sharpening my pencils, testing my rulers, fingering my keyboard and really working hard on finishing up a new book. The manuscript is in and that means I am free to post to the blog.
I apologize that I haven’t written in a while but I’m back, baby, and better than ever. I guarantee it. The commentary, conjecture and noise is flowing like melted butter. That’s the way I am feeling and that’s what you will be getting.
This is an exciting time in the hedge fund industry. There is consolidation, managers are going out of business and new funds are launching – the industry is firing on all cylinders. The real issue, however, is that many managers are performing pitifully and investors wonder why. As Crazy Eddy used to say (before he went to jail), the prices are insane. And the reason they’re so insane is because these hedge fund managers don’t know how to hedge. These so-called and self-professed market mavens are really nothing more then closet indexers and managers who manage for mediocrity. It is a crying shame. Many of these super-deluxe, fancy-smancy, money management organizations are offering little if any value to a diversified portfolio.
It is my belief that the hedge fund bubble has burst, not because of the sub-prime mortgage mess, the credit crunch or the recession. The bubble has burst because managers don’t know how to deal with the volatility. Over the last four odd months as numbers across multiple strategies have come into my vast data base of managers, I have learned that many managers don’t know how to deal with the volatility and are getting hammered.
The result is the beginning of a massive consolidation of the hedge fund industry. That’s right. You heard it here first.
The big funds are going to get bigger. The small funds are going to get out of the business and the medium-size funds are going to join forces with the big funds and build out massive mutual fund-like platforms that allow investors a number of choices while giving managers the ability just to manage money without the infrastructure headaches of being on their own. These money management platforms are being run by a number of large hedge fund managers and as the trend continues don’t be surprised if firms like Fidelity, Vanguard and other large mutual fund complexes get into the game. The future of the hedge fund manager is no longer as a single-manager organization; it’s as a hedge fund supermarket that gives investors lost of choices. This is where the industry is going. It’s an exciting to be in the hedge fund business.
As you may know, the dates for the HedgeAnswers 2008 tour have been set. It’s coming in September and it is going to be awesome. We’re going to be in five cities in twelve days. I hope you will join us. To learn more, go towww.hedgeanswers.com.
In the meanwhile, the blog is back. I am good to go and I will do my best to blog every week. If you have any comments, questions or concerns about the hedge fund industry, or anything else for that matter, get in touch – the email is das@hedgeanswers.com.
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