Hedge fund performance has declined precipitously since the 1990s as assets under management have exploded. The managers are not solely to blame. While alpha has withered, large institutional investors have piled into large hedge fund managers that are perceived to be safe — an industry transformation beautifully summarized by Blackstone Group: The original hedge fund clients,…
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ABSTRACT We show that motivated by sensation seeking, hedge fund managers who own powerful sports cars take on more investment risk but do not deliver higher returns, resulting in lower Sharpe ratios, information ratios, and alphas. Moreover, sensation‐seeking managers trade more frequently, actively, and unconventionally, and prefer lottery‐like stocks. We show further that some investors…
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LB and I have just wrapped up the final in our series on full time trading. For the most part they have been enjoyable except for one twat who complained that it was unprofessional of LB to not present when she was suffering from severe laryngitis. Presenting for the first time in years is an…
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Its a shitty day in Melbourne, so with nothing better to do I decided to fire up excel, download a bit of data and see what I could learn. Anyone who has spent more than 10 minutes on this blog will realise that I am fascinated by mechanisms of generating excess return with minimal cost…
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Institutional Investor have just published their latest list of the top hedge fund earners from 2017. To make things easier I have converted the list into the table show below. The return column is the return for 2017 from the groups highest performing fund. I then decided to reorder the table based upon performance. I…
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I have been thinking about this piece I posted yesterday. The central tenet is that to admit a mistake is to undermine one’s sense of self. Thus doing so is extremely difficult for professional money managers. My thoughts have drifted to the current round of pending and proposed legal action by shareholders against various companies,…
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In an industry where power and influence are measured in dollars and cents, this may be the most exclusive club in finance: The price of admission is at least $25 million. It has no name and no board of directors but has a roster drawn from the world’s wealthiest and most successful traders. Members essentially become…
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I had made an exhaustive study of recessions so that I could form a timeless picture of an archetypal recession and then understand the difference among them. I did that for all economic and market movements and was inclined to do it for just about everything, because it helps me understand how things work. One…
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Ya reckon….yet another thing that probably got a grant when one wasn’t actually needed. Some things belong in the no shit Sherlock file…. Abstract It is widely assumed that psychopathic personality traits promote success in high-powered, competitive contexts such as financial investment. By contrast, empirical studies find that psychopathic leaders can be charming and persuasive,…
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