Hedge Fund Carnage: ‘Invisible Catalyst’ Causing Big Market Moves
By Aaron Task in Investing 16 October 2008
Few tears are being shed as the hedge fund community, once the new “masters of the universe”, are suffering through a big comeuppance.
The hedge fund community is going through a “cleansing process” and 50% of existing funds won’t likely survive, says Todd Harrison, CEO of Minyanville.com and a former hedge fund trader.
But any schadenfreude created by reports of big losses at big hedge funds like Citadel is misplaced, says Harrison, suggesting the “carnage” in hedge funds is directly affecting everybody’s portfolios.
“There is only one stock market,” and forced selling by hedge funds is an “invisible catalyst” that’s contributing to the market’s weakness, he says.
Forced liquidation by hedge funds can be seen in the charts of former favorites like Apple, Google, Potash and Freeport-McMoran, among others. And there’s no end to the selling in sight: $43 billion came out of hedge funds in September alone, according to Trim Tabs, and Harrison thinks more redemptions are coming after October’s grueling start.
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Hedge Fund Carnage: ‘Invisible Catalyst’ Causing Big Market Moves
By Aaron Task in Investing
16 October 2008
Few tears are being shed as the hedge fund community, once the new “masters of the universe”, are suffering through a big comeuppance.
The hedge fund community is going through a “cleansing process” and 50% of existing funds won’t likely survive, says Todd Harrison, CEO of Minyanville.com and a former hedge fund trader.
But any schadenfreude created by reports of big losses at big hedge funds like Citadel is misplaced, says Harrison, suggesting the “carnage” in hedge funds is directly affecting everybody’s portfolios.
“There is only one stock market,” and forced selling by hedge funds is an “invisible catalyst” that’s contributing to the market’s weakness, he says.
Forced liquidation by hedge funds can be seen in the charts of former favorites like Apple, Google, Potash and Freeport-McMoran, among others. And there’s no end to the selling in sight: $43 billion came out of hedge funds in September alone, according to Trim Tabs, and Harrison thinks more redemptions are coming after October’s grueling start.
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