Biz Direct MarketKnowing When To Make A Good Decision

Some equations do work. Good hedge fund + rough quarter = buying opportunity. As expected many hedge funds have performed very well so far in 2009. It is no surprise that the market dislocations, misvaluations and panic-selling hysteria created fantastic opportunities for the best absolute return managers. Inevitably a repeat of 1998, 1994 and 1970 has occurred. Redemptions by some who didn’t understand proper strategy diversification have benefited those that knew they needed skill based funds in their portfolios.

Even more impressive are the hedge funds that made money in both 2008 and 2009. Market timing is hard but some have the ability to do it. The best way to evaluate an investment strategy is its return on risk. Even with the recent stock market rally, the return on risk of long only funds has been poor. As usual the mythical equity risk premium hasn’t worked. Is it zero? Is it negative? I don’t know but it is too unreliable for investors that seek to match institutional liabilities or individuals wanting to grow and preserve their retirement savings. Invest with managers that have the skills and resources to MAKE MONEY when things go
pear-shaped - ie when markets or economies go bad.

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