Hedgies are cratering due to poor performance and client withdrawals, and even the sector's superstars are coming up short:
Why would anybody pay a hedge fund manager 2-and-20 to sit at least 70% in cash? I can do that on my own at zero cost. Unfortunately I have to keep my cash in U.S. dollars, which are becoming dangerously overvalued:
A surging dollar cannot last in the face of massively inflationary Fed liquidity measures, nor can its global supremacy survive demands for a restructured global financial system:
There is no better time to hold a globally diversified portfolio than now. I am staying long the U.S.'s primary creditor (China) and the dollar's primary competitor as a store of value (gold). So what if the past couple of months haven't been kind to them? I'm prepared to wait many years for them to pay off.
Nota bene: Anthony J. Alfidi is long FXI (with covered calls), IAU, and GDX.
U.S. hedge-fund managers may lose 15 percent of assets to withdrawals by year-end while their European rivals shed as much as 25 percent, Huw van Steenis, a Morgan Stanley analyst in London, wrote yesterday in a report to clients. Combined with investment losses, industry assets may shrink to $1.3 trillion, a 32 percent drop from the peak in June.
Why would anybody pay a hedge fund manager 2-and-20 to sit at least 70% in cash? I can do that on my own at zero cost. Unfortunately I have to keep my cash in U.S. dollars, which are becoming dangerously overvalued:
The dollar gained the most in 16 years against the currencies of six major U.S. trading partners as a global economic slowdown spurred demand for the greenback as a haven from losses in emerging markets.
A surging dollar cannot last in the face of massively inflationary Fed liquidity measures, nor can its global supremacy survive demands for a restructured global financial system:
Asian and European leaders called for an overhaul of World War II-era banking rules, lending support to French President Nicolas Sarkozy as he pushes the U.S. to embrace greater supervision of global financial markets.
There is no better time to hold a globally diversified portfolio than now. I am staying long the U.S.'s primary creditor (China) and the dollar's primary competitor as a store of value (gold). So what if the past couple of months haven't been kind to them? I'm prepared to wait many years for them to pay off.
Nota bene: Anthony J. Alfidi is long FXI (with covered calls), IAU, and GDX.
