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    insertwallstrtstereotypehereHamilton Nolan
    9/11/14 11:46am

    Bill Ackman is up close to 40% this year with the S&P at around 7.7%. 5 year annualized is over 15% per annum.

    How's that checking account interest working out for you?

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      Hamilton Nolaninsertwallstrtstereotypehere
      9/11/14 11:58am

      Bill Ackman, the world's only hedge fund, yes. A true insider speaking.

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      insertwallstrtstereotypehereHamilton Nolan
      9/11/14 12:04pm

      He's not the world's only hedge fund. But use any of the multiple free databases to segment out the top performing funds - (even go down to the second decile - you can look that term up- and your thesis falls apart.)

      In other words, if you do some actual work, your thesis falls apart. Not sure if you know that and don't care, or don't know that. Either way, great job.

      So your big point is: "if you include all the bad investments, hedge funds are a bad investment". Well done. You can, of course, say the same for every asset class in the world, or really any investment the world, but good on you.

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    HedgyTheHedgeFundHedgehogHamilton Nolan
    9/11/14 12:02pm

    The fuck is a hedge fund anyway? Can anybody offer me an honest and no-holds-barred explanation without hedging?

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      dothedewHedgyTheHedgeFundHedgehog
      9/11/14 12:48pm

      It is a relatively unregulated investment fund that can only accept investments from rich people, or pple with more than $250,000 in income (I think that is still the limit). Don't concern yourself with the "hedge" part of it. It made sense at one time, but now is meaningless, like the little toe.

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      Hamilton NolanHedgyTheHedgeFundHedgehog
      9/11/14 1:28pm

      It's just a fund that invests money in anything under the sun and charges a lot of money to do so. There are a million different hedge funds and they all have their own strategies (or so they would have you believe). Originally the term came from the idea that investments would be "hedged" so that they couldn't lose too much money no matter which way the market moved, but this is not really reliably true any more I don't think.

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    ElizabethHamilton Nolan
    9/11/14 11:44am

    In my family, we have some funds with a few hedge funds, but for on two reasons. Either:

    1) A friend, or more likely the son or grandson, got a job there and it looks good if they bring in some investors, or

    2)We do business with the fund in another area. Either they rent space from us, or are buying/selling us something.

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      burlivesleftnutElizabeth
      9/11/14 11:50am

      Thanks for your laser sharp focus on this issue.

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      Agree2DisagreeElizabeth
      9/11/14 11:53am

      Oh you are soooo gonna get flamed for this comment. Gawkerites hate seemingly rich people.*

      *Rich is defined as anyone having more money than oneself.

      Edited because my phone decided to submit comment prematurely.

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    toothpetardHamilton Nolan
    9/11/14 11:43am

    The best part about having a lot of money is that you can be really stupid with it and still have a lot.

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      SJestertoothpetard
      9/12/14 10:09am

      And you can make a lot, too. I am floored by the number of successful people whom I know personally that are dumb as a box of rocks. Not idiot savants either. Just idiots. But a wad of cash is enough to overcome the barrier to entry and invest in someone else's successful business as a silent partner.

      But I offer up a prayer on behalf of my successful friends who actually worked for the money - please God, let those idiot silent partners stay silent. Every once in a while they wake up and try to rearrange the furniture.

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    wherearemypants2Hamilton Nolan
    9/11/14 11:40am

    "A fairly uncontroversial position, in most fields."

    Is it, though? Is this actually common for that many people? You, like me, presumably get paid whether your articles are runaway successes or not. Full performance pay is quite rare. Not that this is an argument for or against it.

    And while I certainly am no millionaire, where do you suggest money should go? Sure, for you and me and really any individual, the answer is index funds. But we can't ALL put our money in index funds. Someone has to trade actual stocks and bonds. And that trading has to be done by someone, either the person holding the money or a financial professional.

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      MojiMojiwherearemypants2
      9/11/14 12:40pm

      You're right most people don't have only performance factored into their pay. However, most people only get a flat salary or hourly rate, which is not the case of hedge fund managers. As stated in the article, hedge fund managers get 2% of assets invested and then on top of that 20% of the fund's return.

      Here's a very simple example, consider a fund with $50 million in invested assets at the beginning of the fiscal year. The hedge fund manager get's $1 million (2% of that $50 million) not matter what. Now let's say that over the fiscal year, the fund get's a 10% return. The hedge fund manager get's to keep 20% of that return, which ends up being another $1 million. And the investors end up with a 6% return after the hedge fund manager's take. So, in this scenario, someone is getting paid $2 million to earn a piddly 6% return (which is less than the historical average return of the S&P 500).

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      Argento77MojiMoji
      9/11/14 3:32pm

      You are incorrect...the performance fee is paid only on the amount by which you beat your benchmark. In your example, if the S&P500 was your benchmark and returned 5%, you would only pay 20% of the 5% excess.

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    BrtStlndHamilton Nolan
    9/11/14 12:33pm

    The 2% annual fee alone is egregious as a management fee. 0.75%-1.25% is far more in line with industry standards. Add to that taking 20% of profits from your client... I have no idea how that's even legal.

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      GooglymoogleyHamilton Nolan
      9/11/14 11:52am

      The largest funds, in terms of assets under management, have as their largest investors pension funds and other institutional money managers. As fiduciaries, their institutional investors are required to or mandated to select diversified strategies or a ranges of stuff.

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        dothedewGooglymoogley
        9/11/14 12:50pm

        No pension fund is required to invest in hedge funds or funds of funds.

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      llamadelrayHamilton Nolan
      9/11/14 12:03pm

      I think you'd be surprised about what everyone knows about Hedge Funds. The answer is nothing. Most people know nothing about hedge funds.

      Source - the looks I would get when I would tell people I was in Hedge Funds as an auditor.

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