John Kenneth Galbraith was a famous Keynesian economist who wrote an influential book entitled The Affluent Society in 1958 and contributed a useful phrase to the American way of speaking -- "conventional wisdom."
It can refer to anything that is commonly accepted among others, kinda like saying "everybody else believes this is true, so don't bother me with any other facts."
According to "conventional wisdom," hedge funds produce the best investment results, and that the $2.1 trillion invested in hedge funds represent the "smart money." Although the facts don't support that belief, I remain confident that belief will not change.
According to the Bloomberg Hedge Fund Index, which tracks almost 2,700 hedge funds, they have lost an average of 2.2% every year for the last five years, while the un-managed S&P 500 has gained 0.2% each year.
But, don't worry about the poor hedge fund managers, as their clients pay steep fees. Normally, they are paid "2 & 20." which means they get 2% of the asset value each year plus 20% of any capital gains. By comparison, a traditional investment advisor gets 1% each year and is prohibited in sharing in capital gains. Investors must not mind paying such fees, since total hedge fund assets are up 300% from 2000.
Galbraith once said “There are those who don’t know and those whom don’t know that they don’t know. I say there are those who know they are in the game; there are those who don’t know they are in the game; and there are those who don’t know they are in the game and have become the game”. Such is the fate of investors who willingly pay the high hedge fund fees.
Then, they brag about being a hedge fund investor . . . go figure?
It can refer to anything that is commonly accepted among others, kinda like saying "everybody else believes this is true, so don't bother me with any other facts."
According to "conventional wisdom," hedge funds produce the best investment results, and that the $2.1 trillion invested in hedge funds represent the "smart money." Although the facts don't support that belief, I remain confident that belief will not change.
According to the Bloomberg Hedge Fund Index, which tracks almost 2,700 hedge funds, they have lost an average of 2.2% every year for the last five years, while the un-managed S&P 500 has gained 0.2% each year.
But, don't worry about the poor hedge fund managers, as their clients pay steep fees. Normally, they are paid "2 & 20." which means they get 2% of the asset value each year plus 20% of any capital gains. By comparison, a traditional investment advisor gets 1% each year and is prohibited in sharing in capital gains. Investors must not mind paying such fees, since total hedge fund assets are up 300% from 2000.
Galbraith once said “There are those who don’t know and those whom don’t know that they don’t know. I say there are those who know they are in the game; there are those who don’t know they are in the game; and there are those who don’t know they are in the game and have become the game”. Such is the fate of investors who willingly pay the high hedge fund fees.
Then, they brag about being a hedge fund investor . . . go figure?
