What exactly is a hedge fund? It’s nothing more than an investment vehicle that can buy and sell almost anything. Unlike mutual funds that just charge 1 to 2 percent of assets as a fee no matter how they do, hedge funds get to keep 20 percent (and often more) of their investment gains. It’s an incentive for their managers to lead bizarre lives and suffer from mental anguish. You think they should go crazy for free?
Since that post is copyrighted, I will have to restrict myself from quoting further. You can see the complete entry here: http://kessler.blogs.nytimes.com/, i.e., if you have a subscription. Kessler also lists some guiding principles, few of which are very striking.
- Don't believe in anything.
- Bias leads to disaster.
- Change your mind very often.
Hmm...if only things were so straightforward, life would be bliss, no?
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