Hedge Fund Dummies

Posted by John Carney, Nov 27, 2006, 11:08am

hedgedummies.jpgDealBook this morning mentions the publication of Hedge Funds for Dummies. It's hard to even look at the cover without thinking, "Yeah. Okay. Maybe hedge funds are already over."

Selling for $16.49 on Amazon.com, the book is pitched as a “handy, friendly guide” for people who are considering investing in hedge funds, according to press materials announcing its publication. The book, written by Ann C. Logue, is fairly sophisticated in its approach; by Chapter 6, it is discussing modern portfolio theory and the capital asset pricing model. And it gives ample warnings about the risks of hedge-fund investing.

Still, the book could be coming at an awkward time. In theory, hedge funds are restricted to the wealthy. But some lawmakers have expressed concern in recent months that the threshold is too low, allowing, for example, a couple with a fairly average home in California to meet the requirements. The calls for tighter restrictions became louder after the meltdown of Amaranth Advisors, a multibillion-dollar hedge fund that was forced to liquidate after bets on natural-gas prices went bad.

So this seems like as good a time as any for us to bring up something that's been bothering us lately. We need a moratorium on referring to hedge funds as "unregulated." It's just not true. There are some quite exteme regulations governing hedge funds, including the wealth requirement. They are also subject to SEC disclosure regulations, anti-fraud rules, tax regulations and insider trading regulations. So that's it everyone. No more calling hedge funds "unregulated."

Hedge Fund Fever [DealBook]

0Recommend this! 5Comments
Posted in: Hedge Funds

Comments

Posted by bizwriter, Nov 27, 2006 1:25PM

"Still, the book could be coming at an awkward time. In theory, hedge funds are restricted to the wealthy."

So the wealthy can't also be dummies?

Posted by John Carney, Nov 27, 2006 1:39PM

If the wealthy couldn't be dummies, we would have far, far less material around here.

Posted by E. Vye, Nov 27, 2006 2:11PM

"unregulated" is misleading...it's more significant that they are "unregistered" - so the normal automatic reporting requirements that would be satisfied don't apply...unregistered funds have their own set of strict regulations, but of course the key is the lack of transparency re: individual holdings. Unregistered funds are also not allowed to "advertise" performance results to the public, adding to their cache and secrecy, leading potential investors to believe they're getting in on some exclusive strategy, when they could very well be paying 2 and 25 with a 2-year lock up for cash and spyders.

Posted by Agnar Kapundo, Nov 27, 2006 2:23PM

Two things:

First: 'If the wealthy couldn't be dummies, we would have far, far less material around here' is COMEDY GOLD!

Second: If "Hedge Funds for Dummies" isn't a market top staring you in the face, I don't know what is.

Posted by BJP, Nov 27, 2006 9:26PM

I nominate "market top" for the dealbreaker lexicon wiki

Post Your Comment