aolin1314

How did it happen? Why do they make so much more money than other people in finance do, or than people in industry in general? Do they deserve it? What will they do with it? And who makes it all possible?
hese questions would take an entire book to answer. But I’ll just try to give a few answers that occur to me, and I invite anyone who knows more about this subject than I do to chime in.
irst, the money is basically being made by “positive carry.” (By coincidence, this is also the name of a yacht owned by a supersmart, supersuccessful friend in finance named John Devaney.) That means the hedge funds can borrow money, invest it safely and make enough to repay the loan with interest and still have a profit. They can do this because the cost of money is so low these days.
Why is it so low? Because the Chinese people save about 40 percent of what they earn and use a lot of it to buy United States Treasury securities, keeping overall interest rates low. The Japanese do the same, and so do the immensely wealthy petro-states. So when the hedge fund managers cash their huge checks and sail their yachts and fly in private jets, they should thank people living carefully elsewhere. Savings in Guangdong, China, mean mansions in Greenwich, Conn.
But why do clients pay so much for hedge funds? Why do hedge fund managers get their fabled “2 and 20” — that is, 2 percent of assets under management and 20 percent of all gains past some “hurdle rate” (the return on Treasury securities, the change in the Standard & Poor’s 500-stock index or some other benchmark)? This is largely

knucklez09

What on earth?.....wrong forum.....wrong site aolin1314