![]() ![]() Apparently some of those derivatives weren't risk-free after all, and remember OPM also stands for Other People's Money! Not exactly like the Mexican peso being devalued, except no investment bank caused that Frank, but Johnnie is responsible for LTCM. since the LTCM scandle involved Nobel laureates and their risk-free Option Pricing Model (derivatives again Frank). You would think Frank Partnoy of FIASCO would be bristling, esp. In fact he is still being paid huge sums, and my guess is that wealth people are standing in line in Greenwich to invest more when Johnnie is free again. Scandal-prone Johnnie Meriwether, who was "trained" at Salomon, was "managing" this hyperbolic casino-floater fund, and Johnnie was paid quite well for loosing everyone's money. The Greenwich-based fund had done really well for a year or so, but then there was bit of bad timing and some missing leverage on interest rate differences and various derivatives and poof, LTCM exploded like a supernova locking the Danish mortgages and tequila floaters in the risk-assessment PCs and setting off a world-wide financial catastrophe. The story for hedge funds is pretty much like the LTCM story but without quite so much damage. Remember what Gordon Gekko said to Bud Fox in 1987: "Sport why is it that most fund managers cannot even get the total return of the S&P 500"? Probably more true today than it was in 1987-There are only about 40 equity funds that have exceeded the S&P during the past 15 years or so (the S&P has averaged about 17.5 % per yr. ![]() In fact nearly all fund managers under perform the S&P for almost any extended period of time. ![]() Hedge fund performance only averaged about 16 or 17% in 1995 & 96 (WJS, 16 Nov. As far as I know hedge fund managers do not generally outperform the S&P 500. Schwartz decide to become a hedge fund manager? As clever as he was, Mr. But of course he had numerous other fast turn around strategies that worked for him. This book is engaging, although some of his old strategies like linking after hours trading in T-bonds to S&P futures the next morning no longer hold in 24-hr markets. Just ask any Cornell Medical student about NY Hospital for more cocktail conversation. I used to be there when you were a patient. What experience is shared by the former Shah of Iran, Andy Warhol, Jackie O., and Martin Schwartz? Ans: they all died, or in Martin's case nearly died, at NY Hospital. ![]()
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