He's Warren Buffett, and he's here to help.

This morning Buffett revealed on CNBC's Squawk Box that he's extended an offer to tottering bond insurers to provide re-insurance of on up to $800 billion in municipal bonds. The offer does not, of course, cover the more complicated derivative instruments that have been the source of so much profit and trouble for the bond insurers.

Speaking on the phone with CNBC's Ancient Billionaire Correspondent Becky Quick, the Oracle of Omaha, said Berkshire Hathaway a week ago made the reinsurance offer to bond insurers Ambac, MBIA and FGIC. One firm has already rejected his offer to insure the safest part of their business. We're guessing that's MBIA, which is newly flush with Warburg Pincus cash. The other two haven't returned his calls are still considering the offer. The offer is ticking: he gave them 30 days to respond.

Buffett's plan would likely insure ensure that the covered municipal bonds would not be affected by a downgrade in the ratings of MBIA, Ambac or FGIC. According to Buffett, the trouble with the bond insurers is producing strange price discrepancies, with some uninsured bonds trading above insured bonds. "Essentially, they've already lost their triple A. They're trading as if they had lost it," Buffett said. "In the market the triple A has gone away a long time ago."

Shares of these insurance companies will initially spike on the news, although by satisfying some of the concerns of government insurance regulators it could wind up contributing to the demise of a industry-wide bailout plan. In short, this "bailout" could spell the end of the insurers if the CDO situation gets bad enough. Buffett noted that the CDO exposure for these companies would not be covered, adding that "we can't figure it out" when asked about the extent of that exposure. He described the "natural course" of the CDO insurance as "disastrous."

Perhaps still smarting from DealBreaker's "Will Warren Buffett Go To Hell?" feature, the Oracle stressed that he would "not be presenting this deal to Saint Peter" when he shows at the pearly gates. "We're doing this to make money," Buffett said. "I did not dream this up in one of my pro-bono moments."

We thought we should let you know about this development since the odds are your attention was riveted on Fox Business. While Becks was talking to Buffett, FBN's "Money for Breakfast" co-anchor Peter Barnes wasinterviewing an M&M in a Split-Screen from Candyland. Candyland! Who wants a gumdrop!

Old man Buffett gets a lot of credit for arguing in favor of the estate tax. We’ve never been able to figure that one out, though. He’s already exempted most of his wealth from the tax by donating it to a charity run by his buddy, Bill Gates. And even if you taxed his estate at a rate of 90%, his progeny would still be wealthy. He’s got enough money that he basically doesn’t have to care about taxes.

Not everyone is so fortunate. Although few inheritances are actually subject to the estate tax, millions are spent to avoid it. And a good amount of that is spent in ways that help make Warren Buffett even richer. You see, old Buffett is not exactly a disinterested party in the estate tax debate, and his advocacy of the tax is not exactly a selfless sacrifice. Because he is invested heavily in the insurance industry, he stands to lose a lot of dough if the estate tax every got repealed.

Tim Carney (who is the brother of one of our editors) explains how the insurance industry is lobbying like crazy to preserve the estate tax. Buffett is the industry’s most prominent lobbyist.

Death tax is a lifeline for insurance industry [Washington Examiner]

A new study by Gerald Martin of American University and John Puthenpurackal of (wait for it) the University of Nevada, called “Imitation is the Sincerest Form of Flattery," has found that if you buy the same stocks as Warren Buffett, you will make a lot of money. It’s a companion piece to an equally groundbreaking paper by the same authors which found that Goldman Sachs employs many individuals from an ethnoreligious group originatating in the Israelites or Hebrews of the ancient Middle East. The study found that investors mimicking the Oracle’s stock picks, even up to four months later, would earn an annual return of 24.6 percent, easily beating the S&P 500, which rose 12.8 percent during the same period. Based on these numbers, Martin and Puthenpurackal came to almost the preposterous conclusion that “"Warren Buffett appears to possess investment skill.” (No joke, they actually came to and wrote that conclusion.) Investors partial to mammary glands of the gigantic variety will be pleased to note that Buffett told M&P that when he’s having difficulty making a decision about a stock, one of his tried and true tricks is to stare at a rack not unlike that of Liz Claman’s (and, in many cases, that exact one) for two, maybe three minutes, and the answer will “just come” to him. So keep doing what you’re doing.

Earlier: You Say Harem, I Say Whorehouse

Buying What Buffett Buys Based on Filings Doubles S&P 500 Gains [Bloomberg]

"Derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal."—Warren Buffett

Back in the early days of this century, Warren Buffett faced a rare—although not as rare as some believe—financial setback and public relations disaster when Berkshire Hathaway was forced to shutter its General Reinsurance securities unit, which it had purchased for $22 billion only a few years earlier. The Berkshire-owned company found itself caught up in the financial and accounting scandals, with its business facing serious losses and its executives under investigation by the SEC and facing numerous criminal prosecutions. Even after the company shut it down, General Re, which was a major derivatives dealer, was stuck with 14,384 outstanding contracts with 672 counterparties outstanding, with billions of dollars on the line. Buffett’s personal fortune fell by $5 billion to $30 billion, reducing him to rank of “second richest person” behind Bill Gates.

Right around that time, Buffett publicly turned against derivatives. "When Charlie [Munger,] and I finish reading the long footnotes detailing the derivatives activities of major banks, the only thing we understand is that we don't understand how much risk the institution is taking," he told investors.

But not understanding derivatives and publicly attacking their role in global finance hasn’t stopped Berkshire Hathaway from selling derivative contracts on stock indexes and bonds. This year the company has collected premiums of about $2.5 billion from these derivatives, according to a report in the Wall Street Journal. Buffett once compared being the derivatives business to being in Hell. And, apparently, he likes it there.

Is this rank hypocrisy? Perhaps it depends on what your definition of derivatives is. From the Wall Street Journal article, it’s hard to tell what exactly Berkshire Hathaway has been selling. But it sure sounds like credit derivative swaps. Those derivatives, of course, are part of what fueled investor’s ravenous appetite for corporate debt—at least until the recent credit crunch. It was often said that these derivatives weren’t making the world a riskier place but helping diversify risk—although that assessment in now undergoing a general re-assessment. And these are often considered some of the riskiest types of derivative products on the market.

The lesson seems to be: Watch what they do, not what they say. Especially if they say it in a folksy Midwest way.

Buffett Scores With Derivatives [Wall Street Journal]

It's widely known that Jesus roots for the Colorado Rockies. But now they have a much more important fan: legendary investor Warren Buffet, who is cheering on the Rockies because Berkshire Hathaway chain Jordan's Furniture promised certain customers free furniture if the Red Sox win the World Series.

Why Buffett's Rooting Against the Red Sox [TheStreet.com]

MarketWatch’s David Weidner has finally narrowed down the choices and now you must choose between the two: liar or genocidal maniac?

Human-rights groups said they were disappointed Darfur didn't figure into Buffett's decision. Don't believe a word of it…If it were all about the profit, Buffett, by his own admission, left money on the table. "I still sold it way too soon," he said. This doesn't sound like investing the Warren Buffett way. Berkshire owned more than 11% of PetroChina when it bought its stake in 2006. So, with the stock rising, he sells all of it in a matter of months after an investor protest at the Berkshire annual meeting? Unlikely. Warren Buffett was uncomfortable with this investment. And if he wasn't? Then he's as deluded as the sick people who are profiting from the suffering in Africa.

Not to influence your choice, but we’ve received no fewer than five emails to tips at dealbreaker dot com more or less implying that the Oracle has the heads (like, the skulls) of several Amnesty International officials in his basement meat locker. But he’s also looked Food and Drug Administration officials in the face and flat out lied about the fat content in one of Dairy Queen's large Oreo Blizzards (he says zero grams, they counter that it's more like 25). So this is a tough call.

Oracle and PetroChina [MarketWatch]

Though China Citic Bank Corp, the banking unit of China Citic Group, said as recently as Thursday that it hadn’t spoken with Bear Stearns about buying a stake in the awesomely declining Madison Avenue stock, nor did it plan to “in the next three months,” China’s Citic Securities Co., another unit of Citic Group*, agreed to pay $1 billion for about 6 percent of BSC (with the right to buy an additional 3.9% in the public market), and to also give Bear a 2% stake in the Beijing-based firm for $1 billion, with the option to buy an addition 5% of the company over the next five years. Sneaky! And also, pretty good news for both firms. For Citic (Securities), whose shares have more than tripled so far this year, the deal offers a larger presence in the global market, even if that entryway comes at the price of being associated with Bear Stearns. For Bear Stearns, whose shares are down 28% on the year, the deal means that there’s at least one company out there still willing to work with Bear Stearns. The odd couple is also said to be planning a venture that will combine their operations outside of China. The deal apparently came together in the last few months, though its roots can, completely unsurprisingly, be traced back to 1992, when Citic Group President Chang Zhenming first met Jimmy Cayne, while “playing cards.” (Both men, along with Citic Securities Chair Wang Dongming, are said to share each other’s philosophy of placing hobbies before actual work).

On a related note, Warren Buffett maintains that he "wouldn't touch Bear Stearns with an 80-ft pole," and that the only way you'd ever see something "so sickening" actually come to pass would be if it were the conclusion to a series of escalating dares. But he could very well be lying so...on your toes.

Bear Stearns, China's Citic to Invest in Each Other [Bloomberg]
Bear Stearns, Citic Reach Deal [WSJ]
Bear Stearns and Chinese Bank to Form Joint Venture [NYT]
Bear, Citic Strike Deal [CNN Money]
Bear Stearns and Citic enter a finger trap [Market Watch]
Citic Says It Doesn't Now Plan To Seek Stake in Bear Stearns [WSJ]
China Citic Bank: No Plan To Buy Bear Stearns Stake In 3 Months [CNN Money]
Buffett and Citic Deny Bear Stearns Talks [DealBook]

*Start at the beginning and take a shot every time I say “China” or “Citic.”

In an interview with Liz Claman’s sweater puppets Thursday on Fox, Warren Buffett rebuffed the rumor that Berkshire Hathaway is considering a stake in Bear Stearns, following Citic’s denial on Thursday of having any desire to purchase shares of the precipitously declining stock. Referring to a New York Times article from last month that claimed he might buy as much as 20 percent of the bank, Buffett said, “That was an incorrect story. We were not taking a stake. That one had no basis.” (“First of all, Jimmy Cayne’s bridge game leaves much to be desired. Second of all, the only way you could get me to buy a piece of Bear Stearns would be as the conclusion to a series of escalating dares. Which is how I ended up with Fruit of the Loom, or as I like to call it, “The Poor Man’s Hanes.”)

Buffett also disclosed that Berkshire had unloaded all its shares in PetroChina, but claimed that he sold out “100 percent because of valuation,” and not because human rights groups have been telling him since May that he was personally responsible for the genocide in Darfur. WB said he “sold a little too soon,” since shares of PTR rose even higher after he began to pull out.

When asked how he could have possibly predicted the value of buying into PetroChina four years ago, Buffett told Claman, “other guys read Playboy. I read reports. [I came across PetroChina] and said, this is a great centerfold.”

Earlier: You Say Harem, I Say Whorehouse

Buffett Tells FOX Business He's Sold PetroChina Stake [Fox]
Buffett Avoids Bear Stearns, Countrywide Financial [Bloomberg]
Citic Bank:No Plan To Buy Bear Stearns Shares In Next 3 Months [CNN Money]

Having cut its stake to 652.9 million shares, down from 2.3 billion at the end of 2006, Berkshire Hathaway now owns less than 5 percent of PetroChina, and won’t be required to file additional updates on stock sales, leading analysts to believe that the rest of it could have been sold already. Some people want to know why. Money or genocide? (You know what we think).

Earlier: Why Doesn’t Warren Buffett Want To Fund Genocide Anymore?

Buffett's PetroChina Sale [WSJ]

*We say yes. The message, which Buffett is rumored to have seen before it was cleaned up, read, “Will your conscience let you off on a technicality? The answer is ‘no,’ you stupid Sudanese-killing motherfucker.” That would affect even the most calloused among us.

Warren Buffett has once again reduced Berkshire Hathaway’s stake in PetroChina. Are you surprised? You shouldn’t be. This is the sixth time since July that Buffett has sold shares in the oil and gas producer, this time unloading 220.5 million worth about $362 million, at an average price of HK$12.80 each. BRK’s holdings in Petro are now down nearly half, to 5.44% from a summer high of 11.05%. The fact that PetroChina’s stock hit a record high last week has caused horribly naïve analysts to cite “money” as being a large factor, if not the only factor, in Buffett’s September 25 sale, though the true pink elephant in the room that no one will touch (not even Punk Ziegal & Co) is that sometime in July, Buffett started making a conscious effort to disassociate himself from genocide.

His choice to stop funding the population project in the Sudan—after rejecting a Berkshire shareholder's proposal to sell the entire PetroChina stake because of the parent company's ties to the Sudanese government in May—is just one in a series of truly bizarre decisions on Buffett’s part, including but not limited to (possibly) mulling a stake in a firm at which you can take a few days off to play cards in midst of an enormous crisis but the line is drawn (and fired) at two weeks, and not pressing charges following John Carney’s attempted burglary at Buffett's Omaha house.

Earlier: Washing Our Hands Of The Situation
Why Doesn’t Warren Buffett Want To Fund Genocide Anymore?
You Say Harem, I Say Whorehouse

Buffett Sells PetroChina Shares for the Sixth Time [CNBC]

Most of you are too young to remember this, but back in 1974, when I was working at Salomon Brothers, stocks were really undervalued. How undervalued were they? So undervalued that my good friend Warren Buffett once told me they made him feel “like an oversexed guy in a whorehouse.” We were in his office at the time, which, by the way, looked (and still looks) like a Russ Meyer set, so the bounds of propriety didn’t stop us from having a good laugh about it. ‘Forbes’ actually heard about the analogy and wanted to use it in a profile they were writing about the old boy, which they did, but changed the last word to “harem.” But, for the record, it was originally “whorehouse.” So now you know.

James Michaels, Longtime Forbes Editor, Dies at 86 [New York Times]

Warren Buffett has once again—for the fourth time—reduced Berkshire Hathaway’s stake in PetroChina, to 7.99 percent from 8.21 percent. Though he claims it’s just about money, Buffett’s actions are indicative of a desire to distance himself from a company which human rights activists have a problem with because of its investments in the Sudan, a region that is currently going through a restructuring of its population. Just as nauseatingly, the sale also hints at Buffett’s intent to raise cash in order to buy up a bunch of Bear Stearns (though that has less to do with a dwindling interest in genocide than it does the early stages of dementia). The man cannot be helped. We are done.

Earlier: Why Doesn’t Warren Buffett Want To Fund Genocide Anymore?

Somebody Save Warren Buffett From Himself, Bear Stearns

Buffett Further Cuts PetroChina Stake [AP]

Bear Stearns shares shot up over 8% yesterday after reports surfaced that the Wall Street bank in serious talks with Warren E. Buffett about selling the Oracle of Omaha as much as 20 percent of the firm. But is Warren really riding to the Bear’s rescue? We're skeptical.

It’s hardly news that Bear Stearns has been out shopping a 20% stake to potential investors. There’s been talk of several US bidders and, of course, a Chinese take-out bank making bids. But does Warren make sense? That old guy made out decently with Salomon Brothers but he still hates on them. Yesterday Bess quoted him as saying he how much he found the “brash Salomon culture of big egos, big risks and even bigger salaries to be out of step with his down-to-earth demeanor.” Do you want to be the person who sells him the story that Bear is totally different? We’d rather tell him why Bess Levin was called DQ in high school than try to explain Bear’s internal culture to him.

More importantly, there's little about Bear Stearns to suggest that Buffett would look to put in that kind of money. Trading below book value? You're going to tell us anyone knows what Bear Stearns book value is? Even Bear Stearns admits its guessing about the value of some of the assets it owns. Reliable revenue stream? This company makes much of its money trading securities.

It's also hard to see what Buffett brings to Bear Stearns apart from money and a reputational boost. Bear Stears needs a large cash infusion and a partner that can help it build global exposure. How does Buffett add value to the business? We don't see it.

Probably the strongest point in favor of the rumor is that Buffett is unpredictable. And so that wascaly wabbit might have something this wacky up his sleeve. Just when you thought he was buying trains, he turns around and buys traders.

Yesterday, CNBC’s “simple country reporter” Charlie Gasparino sounded a skeptical note. Nothing we heard would cause us to think that the Old Man of Omaha is anywhere close to buying a huge chunk of Bear Stearns. We do a lot of rumor sorting here at DealBreaker, and we call bullshit on this rumor.

Warren Buffett’s petition for membership to the egalitarian brotherhood of People Who Are Fucking Nuts has been officially accepted. Last year, he decided that Berkshire Hathaway-owned Geico would not take part in the Caveman sitcom. Last week he reduced his company’s investment in genocide to an embarrassingly trivial 8.93 percent. Today comes the news that he’s in serious talks to buy a stake in Bear Stearns. Three times = a trend, this one being WB’s insanity.

The New York Times reports that Buffett first approached James Cayne about the purchase last month, when the bank’s stock was about to celebrate its one-year low of $100. Deals have faltered in the past because the bridge player (first, CEO second) has often insisted on premiums as high as 40 percent above share price from outside investors. This time, and no one can say for certain but it may have something to do with two failed hedge funds, a 61 percent decline in third quarter profits and the fact that BSC can no longer afford its much-needed cleaning staff, Cayne is reportedly holding out for a premium of only around 20 percent.

Bear’s shares jumped on the rumors of possible sale this afternoon, with the stock trading up over 8 percent. Punk Ziegel analyst Richard Bove upgraded BSC from “sell” to “market perform.” Spokesmen for both Bear and Buffett declined to comment, which generally means they’re up to something, though CNBC’s Charlie Gasparino said that he “doubts” the reports are true. (Gasparino also noted with what sounded like hurt feelings that “Jimmy Cayne has not returned my calls,” presumably because it’s a beautiful day for golf.)

In 1987 Buffett took a 12 percent stake in Salomon Brothers, a move he later regretted, finding the “brash Salomon culture of big egos, big risks and even bigger salaries to be out of step with his down-to-earth demeanor.” Hopefully he can be reminded of the bad taste SB left in his mouth, which not even a dozen Oreo Blizzards could purge, before it’s too late. Carney's got the keys to his house-- everyone meets there tonight at 8 for an intervention (power of attorney papers have already been drawn up). We lost him on the Sudan. Let’s not lose him on this.

Earlier: Why Doesn’t Warren Buffett Want To Fund Genocide Anymore?

Buffett Among Those Said to Consider Bear Stake [New York Times]

For reasons totally lost on us, Warren Buffett has once again scaled back Berkshire Hathaway’s stake in PetroChina. In July, Berk sold holdings in the company worth $27 million. Last week, it was $136 million. And just today, 28 million shares valued at $40 million, reducing BRK’s interest to a paltry 8.93 percent from over 11 percent this year.

For those of you who don’t know what this means, we’ll tell you what this means: slowly but surely, Warren Buffett is distancing himself from a government-run company that human rights activists claim has extensive involvement with the Sudan oil industry, and perpetuates what they call “the humanitarian crisis” in Darfur. (This is an overly dramatic way of spinning the truth, which is simply that the region is going through a restructuring of its population.)

Until fairly recently, Buffett had stood up to the anti-genocists, including BRK shareholder Judith Porter, who told WB that cutting ties with PTR would “send a signal to China and to the Sudan that there are costs for continuing this destruction." Buffett argued that he and Berkshire had nothing to do with the “situation,” and that Judy and everyone else ought to quit their bitching. And when asked if today’s and last week’s and July’s sale had anything to do with a decision to take responsibility for aiding and abet serial killers, he said no. And analysts are in agreement: they think it’s just about “the money.”

But we know they’re lying. Nobody wants to admit it, but something’s going on with that old kook, and he’s going soft. Is it the new, young, probably liberal wife’s influence? A sudden fear that John Carney, against all odds, might’ve been onto something when he asked, “is Warren Buffett going to hell?” The fact that in May, two months before he started selling, we called him an “Equal Opportunity Genocide Supporter”? (That was a compliment!) A near-death, life-changing experience? An Oreo Blizzard epiphany?

Don’t answer that. ‘Cause we don’t want to know why this happening, we just want it fixed. Let things go back to the way they were, and no one gets hurt (except maybe the Sudanese. Whatever: details). If we isolate the problem now, we may be able to salvage this thing, but we have to act fast. Today he sells a percentage of his stake in PetroChina for allegedly purely monetary reasons. Tomorrow it could be standing up in a local Dairy Queen and saying “not on my watch.” I just pray it’s not too late.

Earlier: Warren Buffett Is An Equal Opportunity Genocide Supporter

Warren Buffett Trims PetroChina Stake for Third Time [CNBC]

In what the Omaha Police Department is calling an attempted “robbery,” a man with a fake gun and camouflage paint on his face tried to enter the home of Warren Buffett last evening, uninvited. Police responded to a radio call about a disturbance at Buffett’s home at around 10:13 p.m. Astrid, WB’s wife, contacted the authorities after the man in question rang the front doorbell and had a “confrontation” with the estate’s security guard. Unfortunately, Nebraska police, never having dealt with a burglary, were a little late arriving to the scene, and missed the man by a good five minutes.

Anyone with any information is asked to call Crime Stoppers at 402-444-STOP, or the Major Crimes Unit at 402-444-5657. Suspects include a jealous neighbor and the rocket scientists at Global Alpha, who lost a sizeable amount of money by, among other things, betting against Berkshire (and whose leader, Mark Carhart, tempted the gods by making fun of Buffett publicly). And John Carney, who was found earlier this week mowing the lawn and cleaning the gutters at Chez Buffett, the yardwork being unsolicited by the Buffetts themselves.

Warren Buffett's Wife Reports Robbery Attempt [KETV]

Despite what many in the business media seem to believe, Warren Buffett did not spring fully formed from the mind of Zeus. He too was born of woman and today the old guy celebrates his 77th birthday. As a gift to him, we're opening up our special vault of Warren Buffett posts. Some very special items can be found inside.

There's the time we wondered whether Warren Buffett is going to Hell. That prompted him to write a letter about DealBreaker. Let's not forget the time some Australian called him a 'notorious tightwad.' Or the day we learned he had disowned his granddaughter.

Looking back on that list, we have to admit it looks like we've been a bit harsh on the guy. (Maybe that's why no-one at Berkshire returns our calls when we ask for interviews or even just glimpses of the Oracle.) But we're pretty sure Warren's not too broken up over these DealBreaker posts. He's got a lot to cheer him up. A lot of women. Look at all the ladies who seem to have crushed on him in the last year: Liz Claman, Becky Quick and WallStrip's Lindsay Campbell. The girls at Hooters loved him too. And last year, on his birthday, the Dub-Bee got hitched to his longtime sweetheart.

So happy 77th birthday, Warren. Enjoy that Dairy Queen sundae!

An Irvine, California based investor won the charity auction for a lunch with Warren Buffett on Friday night. His $650,100 winning was around 4.8% higher than last years winning bid. But year-over-year growth in the bidding has slowed dramatically, perhaps suggesting that the market for lunch with Warren Buffett is maturing or plateauing. Last year’s winning bid was 76% than the previous years.

As is usually the case with these sorts of things, bidding remained relatively tame for most the auction, but surged almost $250,000 in the last hour.

The winning bid came from Mohnish Pabrai, who manages more than $600 million at his hedge fund. Another hedge fund manager, He said Guy Spier, staked around one-third of his winning bid.

Warren Buffett Power Lunch to Benefit Glide Foundation [eBay.com]
Warren Buffett lunch sells for record $650,100 [Reuters]

It's that time of year again. Just one year after Warren Buffett announced he was buying his way into paradise by donating the bulk of his fortune to a charity run by his friend Bill Gates, the annual auction of lunch with the Oracle of Omaha is back. You now have just four days and twelve hours to place your bids. The auction benefits the San Francisco charity the Glide Foundation.

The winner gets lunch with seven of his or her closest friends at Smith & Wollensky. And, of course, Warren Buffett gets a seat at the table too.

Warren Buffett Lunch Auction [eBay.com]

Nice pump up speech for hedge funds in today’s Hedge Week (we’re not going to make our ‘hedge’ quota by 5 without your help). Despite industry leaders “prophesying an end to the industry,” George Soros saying hedge funds are too over-exposed, Stevie Cohen (immune to self-inflicted irony) noting that the days of big returns are over, Warren Buffett taking hedge funds to task for their high fees in his annual letter to shareholders, and performances in general being down, Hedge Week’s Shoham Cohen still thinks everything will work out if we just think positively!

There are good managers (James Simons) and there are bad managers (Tom Hudson, the guys who do Goldman’s Alpha), Cohen perceptively notes, but given the hotness of HFs, the look-on-the-bright-side news is that every day a new manager emerges (today: Tim Sykes, tomorrow: Tom Sikkes). 1 pt: hedge fund sustainability.

Yes, there are a lot of strategies performing quite badly, of late. But that just means managers will have to work harder to diversify. This is not an obstacle for Cohen, this is an opportunity. And how about numbers, those are always good. First quarter of 2007: $60 billion from global investors. Since hedge funds were invented: $1.6 trillion managed. Big numbers—that’s got to mean something.

The person whose job is predicated on the survival of hedge funds also predicts that the future will allow “personal hedge funds pools to be created” and that there will be room for “tailored managed funds whereby fund managers will open private hedge funds.” Cohen wants you to know that this new era will be an exciting one, and if all you would-be managers out there will peel yourselves up off the bathroom floor, pump yourself full of some happy pills, “overcome the psychological barrier in setting up a fund, and come out with new strategies” and tell yourselves, “I will sell this house today!” we can begin our journey. Together, assembled brotherhood of Neo-HF’ers.

An Apocalyptic Turn for Hedge Funds? [Hedge World]