Alright guys so I found out some more information about these guys at my school who are starting a hedge fund. I learned today that they only have $3000 in their account so far and that they are leveraged 200:1 and trading 30 year bond futures. Furthermore, in every trade they make they only hold %0.5 equity in their position. I also asked one of the "fund managers" about his opinion on the housing numbers today and he promptly responded by saying, "I don't look at that shit! I only take technical analysis into account! Those economic indicators will f*ck you up!"
In my opinion these guys are just being reckless and if you build a simulation with the above variables to predict their performance with a 50/50 success rate (in reality their success rate could be a lot less) it shows that after a handful of trades these guys are going to be bust.
and this bothers you why? Not sure why you are so worked up over these guys. Let them blow up - it's only $3k and will be a good lesson. If they get lucky a few times and turn the $3k into $20k, they will still eventually lose it all with 1 big blowup.
$3,000 hedge fund, haha
$3,000.....what kind of fee structure do they have in place....
not srs
In all seriousness, if you are millionaire, perhaps spreading it around a couple hundred silly mini-funds like is wiser than parking 1 million in a single fund (where the principals, although they graduated from HBS, prob don't generate real alpha).
http://blogs.wsj.com/marketbeat/2011/11/21/hedge-funds-kiss-their-alpha-goodbye/
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