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Deceptive Headline Of The Year…..So Far

Large Hedge Funds Fared Well in 2011

Apparently they didn’t – their managers did. I have written about this disconnect before, here and here

There is a remarkable and somewhat unsavoury difference between what the people who run hedge funds make and what the people who invest in hedge funds make.

As an example consider that you are a manager of a $5 billion dollar fund that in a given year makes 10%.

Managers return @ 20% management fee = $5 billion x 10%/20% = $100,000,000.00

Investors return with $1,000,000 million in fund = $1,000,000.00 x 10% = $100,000.

However this is not a true picture because the investor only makes $80k because the manager takes 20% of all profits.

An index fund is looking pretty good at this stage,

A Sign Of Life

At last some vague sign of life – the marked bars represent 52 day highs so at least the market has made a modestly pathetic attempt at making new highs. As opposed to other world markets that have been making successively new highs in the past few months.

A Tale Of Two Brains

I am currently reading the excellent¬†Who’s in Charge?: Free Will and the Science of the Brain which delves into the nature of consciousness and free will. Like all good cross over science books it can be read by the lay person without much difficulty.

Whilst follow up on a chapter on split brain surgery I came across this nifty little piece .

The interesting thing about neuroscience is the drift it has into philosophy and the nature of free will. This cross pollination comes courtesy of new imagining technology that somewhat disturbingly shows that the body begins to take action before a conscious thought has begun. People are not as in charge as they believe they might be.

Its Friday

A bit slow with updates this week since I have been baby sitting the new mentorees.

For some reason I find this hilarious


I have been watching the latest US rally with some interest and each night when I review the markets I notice an interesting thing. The rally is extremely lumpy in its distribution.

Have a look at the graph below which compares the rally in the major US indices to the FTSE100, ASX 200 and the Nikkei 225.

As a block the US has done well, lead by the Nasdaq which has been dragged up by the likes of Apple. However, the gain in the S&P500 shows this to be a rally with broad support. The basket cases of the group are undoubtedly the Shanghai Composite and the ASX200.

The case could be made that whilst China is rooted in terms of market sentiment then we will largely be rooted as well.


I found these two neat little charts courtesy of the OECD Strategic Infrastructure Needs to 2030 which seems to have been assembled by a cast of thousands.

This first chart looks at competitiveness versus quality of infrastructure. As you can see in terms of the OECD we are only just hanging in there and we rank above economic powers such as Brazil, Russia, India, Italy and China. Which is not really much to boast about.

There is nothing revolutionary in this chart since anyone who has ever could a train in Australia can tell you how rooted the infrastructure is. But we do have big roads – there is probably something Freudian in that for politicians.

The next chart is interesting in that it looks at the size of pension reserve Рin the case of Australia I guess they are including  super in the mix to achieve such a whopping big number.

The suggestion is that part of this coin can be used to fund infrastructure projects. My view on this is one of profound indifference since I don’t think it would be any worse than allow a fund manager to look after it. Who knows a new port or something might actually return more than 3.9% pa.

Apple Versus Priceline

With all the talk of astronomical prices predicted for Apple my attention was drawn to this comparison.

At this stage my money would be on Priceline to hit the magic $1,000 mark.

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