Category: Hedge Funds
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Essence of Portfolio Management
“The essence of investment management is the management of risks, not the management of returns. Well-managed portfolios start with this precept.” – Benjamin Graham The problem is many portfolio managers believe they manage risk through their investment selection.… Read More
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Asymmetric Nature of Losses and Loss Aversion
Loss Aversion: “In prospect theory, loss aversion refers to the tendency for people to strongly prefer avoiding losses than acquiring gains. Some studies suggest that losses are as much as twice as psychologically powerful as… Read More
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Absolute Return: an investment objective and strategy
Absolute Return in its basic definition is the return that an asset achieves over a certain period of time. This measure looks at the appreciation or depreciation (expressed as a dollar amount or a percentage).… Read More
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Absolute Return as an Investment Strategy
In “Absolute Return: The Basic Definition”, I explained an absolute return is the return that an asset achieves over a certain period of time. To me, absolute return is also an investment objective. In “Absolute Return… Read More
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Absolute Return as an Investment Objective
In Absolute Return: The Basic Definition, I explained an absolute return is the return that an asset achieves over a certain period of time. To me, absolute return is also an investment objective. Absolute Return as… Read More
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Markets don’t always react the way investors expect, so I focus on what is actually happening
I noted the below question and answer between Jack Schwager and Ray Dalio in Jack’s book “Hedge Fund Market Wizards: How Winning Traders Win” (2012). Ray Dalio is the founder of Bridgewater, the largest hedge… Read More
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Madoff wasn’t a hedge fund
Bernie Madoff is back in the news lately as it’s now been 5 years since he was arrested for the largest Ponzi Scheme. For some reason, the name is commonly linked to “hedge funds”. Yet,… Read More
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Understanding Hedge Fund Index Performance
I am often fascinated by investor perception and behavior. I notice it everywhere and study it always. What a person believes makes their world what it is and how they see things. It can also… Read More
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Hedge funds charging highest performance fees provide best returns
A performance incentive fee is the key compensation for a hedge fund manager. Many people may not understand the concept of “alignment of interest”. For example, an investor recently told me they only invest in… Read More
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The Little Book of Hedge Funds by Anthony Scaramucci
I read The Little Book of Hedge Funds over a weekend. It’s an easy read and an excellent choice if you want to get a good overall understanding of hedge funds and the general industry… Read More