DealBook 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]