We hedge our bets (hence the name hedge funds) so that in market downturns, we use the profits from these weird investments that hit the green without liquidating the typical stocks. We use that money to buy the dips on regular stocks, failing businesses, and cheap real estate. Then, the market rebounds, and we still have our SPX without taking losses. You only get richer once you hit approximately $20M net worth and understand this.
Institutional investors love recessions. At my trade desk firm in Chicago (CBOE) during Covid we were each making the firm like $300k/hour scalping retails with a 20% cut.
You're painting with an awfully broad brush here. Hedge funds make large directional bets all of the time. Clearly they don't all carefully hedge given how many funds have blown up in past downturns.
Hmm. Millenium and Citadel are down Q1. Many hedge funds are not at all hedged, in fact many (most?) are long only these days. And even then, the uncorrelation to markets is a bit tenuous.
But glad things are going well for you in your universe.
The opposite is true.
We hedge our bets (hence the name hedge funds) so that in market downturns, we use the profits from these weird investments that hit the green without liquidating the typical stocks. We use that money to buy the dips on regular stocks, failing businesses, and cheap real estate. Then, the market rebounds, and we still have our SPX without taking losses. You only get richer once you hit approximately $20M net worth and understand this.
Institutional investors love recessions. At my trade desk firm in Chicago (CBOE) during Covid we were each making the firm like $300k/hour scalping retails with a 20% cut.
You're painting with an awfully broad brush here. Hedge funds make large directional bets all of the time. Clearly they don't all carefully hedge given how many funds have blown up in past downturns.
Hmm. Millenium and Citadel are down Q1. Many hedge funds are not at all hedged, in fact many (most?) are long only these days. And even then, the uncorrelation to markets is a bit tenuous.
But glad things are going well for you in your universe.
Please reread my comment, slowly.
And perhaps Google about hedge funds a bit to understand how they make money. Of course most are down now...
The whole point is not all hedge funds are supposed to outperform SPY, hence the name "hedge." They make money on fees.
As usual one man is ultra prepared for this.
Buffet has been sitting on a massive pile of cash for some time now...