What happens to hedge fund jobs during a market crash?
What happened in 2000 and 2008? Did a lot of people get fired? Or do a lot of the HF's strategies work because they're not as long.
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Ummm...did you miss March 2020?
That didn't last long enough to result in firings, did it?
Ignore Pizz, they're always commenting some dumb shit
Your the one whose dumb
Well, I wasn't around during 2007 - 2008. Mar 2020 led to Millennium closing down a whole bunch of pods. Cubist was firing as well according to my network. Occasions like are when the people who swim naked gets flushed out.
It depends on the fund. But in general, things like L/S funds should not really care about whether the whole market goes up and down. And they should benefit from increase volatility, so you'd probably find several positive results out there...
During a market crash most hedge funds get crushed, because a lot of them are levered beta in disguise. And because correlation of assets goes to 1 in market panics. The market rushes to cash. There are plenty of "good" funds that may suffer in market crashes. And I'm not just talking about mark to market. But think of their clients. Let's say you run a HF and the market is getting killed. You are actually doing ok, but hey, your pension/endowment/foundation needs liquidity to pay out its retirees/fund the operations of its organization... and it's not going to be able to get out of its illiquid PE holdings. Guess what, they are going to try to redeem from your fund. So while most of the market is selling... So do you, because you have to convert to cash to, well, see out your legal obligations. And you are already selling into a market that's selling so you lose even more money..
Now that's just a technical, rather than fundamental example but I'm sure you get my drift.
This means you are managing less money. Less money means less management fees (forget about performance fees)... Less management fees means less revenues. Less revenues means less money to pay people salaries. What are you going to do? Naturally you will cut people or won't really hire anyone else...
Yes there are funds that do great in times of high market volatility and hire people. Sure. But in general that is absolutely not the case.
Hope this helps
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