Yahoo Finance: "Financial world braces for huge Chinese investment fund"
Financial world braces for huge Chinese investment fund - Yahoo! News
The Unknown Advisor is an investment advisory representative for a registered investment advisor in Florida. This blog is not about selling. It's about general investment information, about what has worked, over time in investing. Asset allocation, for example, has worked. Because certain things have worked, they are likely to work in the future. Feel free to email me questions.
"Correction" Does it mean that something about the markets was wrong, and now it is right? All the word (poorly) describes is that the market went down, presumably when hedge funds and other short sellers speculatively attacked it en masse, in the hope that thousands of fools would follow them in selling, then they could buy back in to cover their positions.
It's interesting. The drop of the Shanghai Composite Index should be no shock, as it has been going up so fast for so long, looking ripe for some possible downward volatility. So we have some. What's important about this? Volatility happens. Speculators lose money, mostly. I really believe that what is most important is long-term in nature. I would hope that if China is fortunate enough and its leaders wise enough to avoid messing up their great possibilities, (and I think they may be,) this century can be the beginning of a golden age for China and indeed, for many of the emerging market nations. But human history show us that the leaders of great nations are too often not much wiser than the rest of us.
Back to a little blogging, after some time away. The linked article focuses on long-short, or market-neutral funds, now being sold to investors with much less in investable funds.
This series of his is always good. Well, I thought it, and this once I'll write it. Is there a particularly hot place in Hell, well-populated by the lowest, worst sort of insurance salesmen?
The key points...
Labels: hedge funds
Naahhh. Seriously, there is a debate on this. And while there is something to be said for not unnecessarily living the life of an ascetic, there is certainly the necessity in this life for most people to be a little bit prudent about saving for their retirement years. Ms. Rowley does a nice job, as usual, of reviewing the issue. The important thing, if you are not saving, is to start, and stick with it. Saving something is better than saving nothing. Saving a little more is better than saving a little less. Take a step for your future. This month.
Play within the rules, but use them. Hobbies are not businesses, so be careful.
Hey! So, what's the problem, huh? So what if a few executives finagled their options grant date? Why all this fuss? Everybody's done it, and no one will ever know. And you worked real hard for the company last year. You're entitled to be taken care of too. We'll just fix the papers, OK? Sign here. You don't want to be known as some kind of ethical freak do you?
Well, actually the money is for the defrauded clients of the hedge fund. Bear Stearns was the prime broker for the fund. It's a sad, sad story. The fund manager, Michael Berger, lost money on short sales, fraudulently issued client statements for an extended period, and fled the country and is still a fugitive. Bear Stearns "learned as early as December 1998 that [he] may have been deceiving investors about returns." Manhattan Investment collapsed in 2000.
I'll be posting on a few of the commonly-encountered mutual fund upgrading approaches. Tip-off: there is essentially no objective research support for this idea. It is one approach to trend-following as an investment approach. We'll start with an overview of how these things try to work.
Value Line's closed-end fund, the First Trust Value Line Fund, FVL, has been trading at a discount to its NAV, its net asset value, per Mr. Hulbert, who writes for MarketWatch, mostly on newsletters. If there is a more tireless student of investing newsletters, I don't know who it could be. FVL is being converted to an exchange-traded fund.
A story on how a group concerned about global warming, rather than dump or avoid stocks of companies they have concerns about, are using their status as shareholders to seek to influence the companies in the direction they wish them to go.
Labels: socially-responsible investing
Labels: socially-responsible investing
There is disturbing evidence, for example, that hedge funds make some of their money by trading on what most laymen would consider inside information. There are entire firms devoted to obtaining proprietary information from present and former employees of companies, suppliers and contractors. Others have approached researchers offering to pay for an early peek at drug-trial results. Hedge funds reportedly spend big money for lobbyists who might tip them off to major legislative developments before they happen. And just this week, the SEC announced that it was investigating whether hedge funds had received tips from investment banks and brokerage houses about coming trades or merger announcements.
SmartMoney should get a lot of credit for stories like this one and the last few I've linked to, instead of puffy, fluffy stuff. If you use mutual funds in your own investing, you have an interest in this issue, and should have some knowledge of the governance practices at "your" fund families. Silence is bad for your financial well-being, but ignorance is the worst. How they run the fund you're in should be part of your ongoing evaluation of whether you stay with it.
It's a pretty nice review of the impending regulatory scene. And don't miss the linked MarketWatch article on people lying to become "accedited investors".
That title says it all, if you ask me. Subpar returns as a group, rapacious, eggregious fees, and no articulated rational basis for the idea that they can as a group deliver premium returns. They are a potentially destabilizing force in the financial markets. Other than that, they're great! Oh yes, and regarding the ones marketed to individuals, some of the managers have had big losses and then run off with what was left of the money. Why would anyone get concerned over tiny little things like that?
There are some letters to the Editor in today's WSJ on this. (p.B5) I blogged on the original article Here.
A possible big downer. If the 'evil hedge funds', (sorry!) can 'crack' the rebalancing routines of an actively-managed ETF, and can front-run them, i.e., buy the things it will be buying first, then they will be lining up in droves to do so, to the detriment of the investors buying that fund. Tracking error could be an entirely inadequate phrase to describe the ugly result. Possible investors in any such fund should be given sufficient information to carefully evaluate the risk of the fund being exploited by front-runners.
A quote: "Failures, liquidations should decline in coming years"
Yes it was. It doesn't work. Just like every other publicly-disclosed charting strategy, when subjected to objective research, it fails, or succeeds randomly, same thing. Oh wait. There was one study, involving a trend-following approach, which suggested some mildly exploitable characteristics might exist, before taxes and trading costs. But not after. El Dorado is still not there. BTW, you do understand, that if it worked fifty percent of the time, you could do as well with coin flipping, right? These "charting" approaches can all be considered to be in a busted condition.
It's good reading. To be fair, as with any investment, any one year has limited importance. It's made really good money in years past, but it added "negative alpha" in 2006. If you're not familiar with the term, that's OK. The article gives you a good definition.
Labels: economic outlook
Arrrgh. I will say this for hedge funds: they make some of the most interesting stories. you know, you could do a whole blog just on the blow-ups. I know, I know. My point is that for every poor way to commit money in the financial world, there is a better way you could employ. Educate yourself or get yourself a fee-only, low-fee advisor with good fiduciary standards.
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