Biz Direct MarketKnowing When To Make A Good Decision

Pension fund? First meeting of 2011 was with a large pension moving its portfolio to 100% hedge funds. Why let retirement benefits, income streams and funded status be affected by stock and bond volatility? Someday 100% in skilled strategies will be standard for DB and DC plans. Why avoid top funds? It’s rare for institutions to not invest in alternatives but allocations are often too low.

Absolute liabilities need absolute returns. Promises must be paid regardless of the economy or interest rates but how to optimally fund them? Raise expected returns, reduce age eligibility and invest smartly. Long term success needs short term focus. Skill is the friend, time is the enemy. Some may have the patience but retirees don’t have the time for the stock market to deliver its magic.

Read the rest of this entry »

Pension fund? The first meeting in 2011 was with a large pension that will be transitioning its entire portfolio to hedge funds this year. Why should retirement benefits, income streams and funded status be affected by the volatility of stocks and bonds? 100% in skill-based strategies will one day be standard for DB and DC pensions. Why wouldn’t you want the best managers putting capital to work? It is now rare for institutions to not allocate to alternatives but generally the percentage is far below required amounts. Benefit promises must be kept regardless of the economy or interest rates but how to OPTIMALLY fund them? Absolute liabilities require absolute returns.

Despite the fees, alternative investments are often the cheapest liability solution. Increase performance and reduce shortfall risk by focusing on the best risk/return strategies. Expect and require +10% after fees from the top teams. I do. Global markets are complicated, sophisticated and codependent nowadays so invest in unskilled managers or those with the ability and resources to capture alpha opportunities in any economic conditions? Social security and portfolio optimization from assets or strategies? Fiduciary duty requires putting capital to work in the most cost-effective ways available to maximize growth and minimize the risk of not being able to deliver. A $1 million portfolio should provide annual income of at least $100,000 with principal protection.

Read the rest of this entry »

Who’s best? Warren Buffett or George Soros? Why risk hard-earned capital with managers who are not the best in the world at what they do? Warren runs the largest hedge fund but George is the top performer. They searched for successors only from hedge funds and all their liquid net worth is in absolute return strategies. The top sportspeople play in major leagues not minors and where do you find the best portfolio managers? George and Warren’s edges were clear long ago so there was plenty of time to invest. Their success has brought major social benefits and secure retirements for clients.

Some even claim Warren isn’t a hedge fund manager but his arbitrage, leverage, derivatives, event-driven and macro trading added much to returns and he short sold cocoa futures in a special situations deal as far back as 1954. George and Warren generated alpha from low frequency trading in various fund structures. Double Eagle - Quantum, Buffett Partnership - Berkshire Hathaway. Like many hedge funds, they don’t report to databases. Neither has a PhD or CFA but both have exceptional quantitative skills. I have never found a good manager that doesn’t even if they run “discretionary” styles. Skilled hedge funds do deliver reliable high returns at low risk. And prove that market prices are always wrong.

Read the rest of this entry »

Who’s best? Warren Buffett or George Soros? Why any risk hard-earned capital with managers who are not the best in the world? Warren runs the largest hedge fund and George is the top performer. They searched for successors only from hedge funds and all their liquid net worth is in absolute return strategies. The top sportspeople play in major leagues not minors and where do you find the best portfolio managers? George and Warren’s edges were clear long ago so there was plenty of time to invest. Their success has brought major social benefit and secure retirements for clients.

Some even claim Warren isn’t a hedge fund manager but his arbitrage, leverage, derivatives, event-driven and macro trading added much to returns and he short sold cocoa futures in a special situations deal as far back as 1954. George and Warren generated alpha from low frequency trading in various fund structures. Double Eagle - Quantum, Buffett Partnership - Berkshire Hathaway. They don’t report to hedge fund databases. Neither has a PhD or CFA but both have exceptional quantitative skills. I have never found a good manager that doesn’t even if they run “discretionary” styles. Skilled hedge funds do deliver reliable high returns at low risk. And prove that market prices are always wrong.

Read the rest of this entry »

Warren Buffett manages the largest hedge fund and George Soros runs the top performer. Why risk hard-earned capital with people who are not the world’s best at what they do? Warren and George searched for successors only from hedge funds and their liquid net worth is all in absolute return. The top sportspeople play in major leagues not minors and where are you likely to find the best portfolio managers? George and Warren’s edges were known long ago so there was plenty of time to invest. Their successful hedge funds have brought major philanthropic benefits for society and made their clients very wealthy. And proven that market prices usually wrong.

Those claiming Warren is not a hedge fund manager seem unaware that arbitrage, leverage, derivatives, event-driven, special situations and macro trading added heavily to returns and he short sold cocoa for a capital structure arb as far back as 1954. Neither has a PhD or CFA but Warren and George have exceptional quantitative skills. I have never found a good trader that doesn’t even if they run “discretionary” styles. George and Warren generated lots of alpha from low frequency trading in various fund structures. Double Eagle -Quantum, Buffett Partnership - Berkshire Hathaway. High return, low risk can be delivered…by some.

Read the rest of this entry »

Who’s better? Warren Buffett or George Soros? Why invest capital with people who are not the best at what they do? Warren and George searched for successors from hedge funds and their liquid net worth is ALL in absolute return. If you want the best sportspeople you look in Major Leagues not Minors and where are you likely to find the best portfolio managers? George and Warren’s talents were proven long ago so there was plenty of time to invest. Their successful careers as hedge fund managers have had major philanthropic effects on society and economic benefits for clients.

Those claiming Warren is not a hedge fund manager seem unaware that arbitrage, leverage, derivatives, event-driven, special situations and macro trading added much to his returns and he shorted cocoa for a capital structure arb as far back as 1954. Neither has a PhD or CFA but both Warren and George have exceptional quantitative skills. I have never found a good trader that doesn’t, even if they run a “discretionary” style. Below is net of any fees ACTUAL growth of $1,000 since 1969 from George and team, Warren and team versus the long only “passive” S&P 500 team.

Read the rest of this entry »

Correlation? Markets moving in unison? Correlation is a misleading metric of no help in measuring or achieving diversification. Highly correlated securities CAN diversify portfolios but some “uncorrelated” managers are too dependent on the market. Below is a hypothetical hedge fund with +1.00 correlation to the S&P500. Absolute returns in all years and CAGR +17.65% but correlated PERFECTLY to a risky index fund which lost money. It diversified despite that pesky correlation.

Read the rest of this entry »

Correlation? Markets moving in unison? Correlation is a misleading metric of no help in measuring or achieving diversification. Highly correlated funds CAN diversify portfolios but some uncorrelated strategies are too dependent on the market. Below is a hypothetical hedge fund with +1.00 correlation to the S&P500. Absolute returns every year and +17.65% CAGR but correlated PERFECTLY to a risky index fund which lost money. It diversified despite that pesky correlation.

Read the rest of this entry »

Correlation? Assets moving in synchrony? Correlation is a misleading statistic of little help in measuring or achieving diversification. Highly correlated funds CAN hedge a portfolio but some uncorrelated strategies are too dependent on underlying markets. Below is a hypothetical hedge fund with +1.00 correlation to the S&P500. Absolute returns every year and +17.65% CAGR but correlated PERFECTLY with a risky index fund which lost money! The product clearly offered diversification despite that pesky correlation.

Read the rest of this entry »

Correlation? More assets moving in synchrony? Correlation is a misleading statistic of little help in measuring or achieving diversification. Highly correlated funds CAN hedge a portfolio but some uncorrelated strategies are too dependent on underlying markets. Below is a hypothetical hedge fund with +1.00 correlation to the S&P500. Absolute returns every year and +17.65% CAGR but correlated PERFECTLY with a risky index fund which lost money! Clearly the product offered diversification despite that pesky correlation.

Read the rest of this entry »