Hedge Funds – Extinct

Hedge Funds Extinct by Q1 2009

Hedge funds extinct by 2009, or so some bloggers and journalists would have you believe. Below is a typical article title and quote that I see in mainstream media on a daily basis. This title below is from a BloggingStocks article and is a perfect combination for what I was looking to write on today:

“Hedge Funds Headed For Extinction”

[First Line] It was an easy ticket to riches – becoming a hedge fund manager…full article here

1. First, hedge funds were never an easy ticket to riches – 99% of hedge fund managers don’t make out like Andrew Lahde with 8 digit take downs in a single year, or a whole career for that matter. This is like saying it was an easy ticket to become an NBA player. Anyone can say they play basketball, but if you are not in the top .1% you don’t play in the NBA or make “riches.”
2. Hedge funds are not headed towards extinction, there are well over 8,000 hedge funds, 500 unique strategies being implemented in over 30 countries around the world. In the last week alone I’ve heard from 4 commercial real estate hedge funds which each run unique strategies. Even within this small niche of the industry there is a rapid evolution of capital deployment based on what works. During this crisis every day which traditional capital sources remain dry, private corporations grow relationships with hedge fund and private equity firms and the private corporations begin to adapt to seeking these new sources of capital for alternative sources.

Some academics and many journalists are predicting the end of hedge funds I predict the re-doubling of their strength. We can’t both be right. I believe banks will be nailed to the wall with regulations and lower profit margins while hedge funds fill in the cracks of where they no longer do business.

I am not an expert on what the economy or stock market will do next. I don’t try to make those types of predictions – there are enough blogs which are dedicated to that end, but I do predict that when the economy does recover hedge funds will be there first, profit the most and once again running a hedge fund will be the “easy ticket to riches.“

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Tags: hedge funds extinct, hedge funds will be extinct, hedge fund recovery, strength of the hedge fund industry, hedge fund manager performance, hedge fund performance

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