Hedge Fund Historian Begins Process Of Determining When Hedge Funds’ Decline Became Terminal

Does 2006 sound about right?
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When historians seek to make sense of these things called hedge funds at some point in the future (assuming that Tuesday, November 8, 2016, does not usher in the end of history), they could be forgiven for placing the beginning of the end for them right around now. Some sources will show that this was when the unwashed’s war on the erstwhile Masters of the Universe began to pay dividends, as institutional investors from sea to shining sea began to abandon the market maestros. Certainly, in this foul year of our Lord 2016, the formerly great are starting to look and sound a little desperate. They’ve even started turningon eachother and accept pats on the head for trying and asking sincerely, “Why don’t you like me? And what can I do to be your friend?” There are instances of PTSD and siege mentalities and attempts to sell all of their possessions. Gala events that once took on Caligulan proportions have been reduced to group therapy sessions and mucking with the locals. They are being accused of causing cancer. Sometimes, they are resorting to threats of violence. Two houses in the greater Greenwich area failed to sell on the first try. And, worst of all and not entirely unrelatedly, people don’t think they’re worth all they’re getting. Certainly, all the signs seem to be there.

But as President Trump’s admonition to Make America Great Again begs the question of when, exactly, was America Great and when did America stop being Great*, lamentations for the demise of the “Good Old Days” for hedge funds begs the question of when those where, and when they ended. Bloomberg historian Michael Regan has sifted through the current batch of hedge fund doom-and-gloom, and he’s not at all convinced that this particular Twilight of the Idols is an altogether new thing.

Ken Griffin said the heyday of hedge funds was over way back in October 2008, and who can blame him since it seemed like the heyday of capitalism itself was over then. Some think the heyday's dusk was in the spring of 2007, when Kenneth Cole marked down the price of its "Hedge Fund Loafers" by 25 percent. But, c'mon, a $100 pair of Kenneth Cole shoes? Those sound more like Pension Fund Loafers, at best. Some even said the hedge fund heyday may have ended in 2006, when Amaranth Advisers flared off $6 billion because of bad natural-gas bets.

So, cheer up! Either the end hasn't begun yet, or it began a long time ago and is now irreversible.

Divorcing Your Hedge Fund Manager [Bloomberg Gadfly]

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