In the late 1960’s a colleague started up a
hedge fund, one of those then spanking new investment vehicles with the dual objective of 1) obviating stock market risk through unconventional strategies
to make money when prices fall on Wall Street by finding equity returns in strange
new ways that unwind any correlation with the vagaries of public equity markets,
and 2) offering participation only to the
wealthy.
Long a most curious quirk in the investment management game, securities laws hold
that the wealthy, solely by virtue of that wealth, are “sophisticated investors”,
meaning they can’t sue you. That
explained the second objective.
None
of us ever knew quite what any of these guys meant by the first.
That
was nearly half a century ago. Recently
the Wall Street Journal reported that only now has the Securities and Excuses
Commission decided to try and look into the kind of hanky-panky that might be going on here. Our intrepid watchdogs have
finally devised a method of highlighting hedge funds whose balance sheets never
seem to suffer no matter how rocky the market gets.
Holy
Calamari, subscribers. That’s Objective Number One. Excuse us for thinking it’s about
time.
