A friend showed me this page that was posted on Reddit recently. The facts are the facts, but how do you feel about the opinions he makes about the system set up around Hedgefunds? I'm curious to see everyone's thoughts on the issue.
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Haven't we already gone over this (twice) on here already?
Sorry if you have! I didn't know what keywords to search through. Can you link me to a few of those threads? :)
"Shiiiieeeet I take any fool's money if he GIVIN' it away!" - Clay Davis/Every fund manager ever
As usual with reddit, there is tons of false outrage and misinformation in that post. For instance:
The author says hedge funds avoid paying taxes by using their losses to offset future gains...corporations can do this...even individuals can. It's called a capital loss carryover. You can get the tax worksheet from the IRS.
He talks about how hedge funds operate on a 2 and 20 fee structure...then a few sentences later says how mutual fund managers are "taking a cut", implying they are charging high fees.
And why does he act outraged that hedge funds have "analysts working around the clock"? It is a competition- somebody who devotes hundreds of hours to research is going to do a lot better than somebody who watches Mad Money a couple times a week. That is why the asset management industry exists.
Then the absurd thing is he says "Their sole purpose is to earn money, not to mitigate risk", like it is an advantage. If the expected return is less when adjusted for risk, then it is not an advantage at all. Yea, somebody might see 20-30% returns for years...but if the fund implodes, it doesn't really matter.
I am not saying the rich don't have advantageous investment options, but it certainly does not preclude the average investor from benefiting from capital markets.
Those are some excellent points you made and I'll definitely look into some of the concepts you talked about. I do agree that these advantages don't severely hinder a regular person's ability to make a return on a consistent basis.
If there are any other thoughtful opinions, I'd love to hear. Unlike some of the off-topic, unrelated personal attacks from people that are perhaps trying to avoid their own inability to properly refute some of the claims in that post.
Although I think 90% of that article is a load of shit, I do think that non-accredited investors should be allowed to invest in hedge funds.
Your first mistake was reading anything on Red-shit
;p
I'm betting this guy has some MO/BO role in a HF and thinks he knows everything there is to know about fy-nance. Every once in a while some guy posts "I work at Goldman Sachs/JPM/MS Ask me Anything about how wall street is fucking main street" and then he'll go on a standard OWS rant and then say something like "...Well I work in IT but I know more than the average IT person about what REALLY goes on at this place." Its just a way for the average Reddit neckbeard to confirm their previously held beliefs.
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