Trim the Hedge Before the Hedge Trims You
Anybody out there heard of hedge funds? All the rich folk have, for sure, because that used to be a very carefully protected investment gig . . . secured against the common folk by the entrance fee, which was always negotiable but up towards a million a throw. Kept the riff-raff out.
But the riff as well as the raff are allowed in these days because, greed being what it is, there’s always someone interested in big numbers and big numbers come from small investors. Funds made up of funds, pretty much like the idea behind mutual funds, now have aggregate investment portals as low as $25,000 and they are themselves aggregates, putting together a couple dozen $1,000 rollers to make the ante.
The trouble with hedge funds, in simplified terms, is fourfold
Hardly anyone really understands them, even the brokers who sell them
There’s no certified and standardized ‘entrance exam’ for fund managers
They’re for the most part unregulated
They leverage their investments to the extreme, because they …