Tuesday, 13 January 2009

The crisis for the rich

It is the wealthy who have taken the greatest hit, at least so far. According to bloomberg, hedge funds lost $350 billion globally last year. About 90 percent of that money was lost in the three months to the end of November. Overall, the hedge-fund industry shrank by about a fifth.

Do you know anyone who has invested in a hedge fund? Thought not.

10 comments:

Josh said...

So we are moving to a more equal society. New Labour wins.

dearieme said...

How would I know whether I know anyone who has invested in a hedge fund?

Anonymous said...

dearieme, people who invest in hedge funds are quick to tell others.

Anonymous said...

I beg to differ! The wealthy are still getting their (multi?) million dollar bonuses. It is us who put money into pensions and savings, and those very pensions and savings finding their way into the hedge funds. If the hedge funds lost money, it is ours. The managers still get away with the huge bonuses. Guess who is paying for these fat-cat banker bonuses? Guess why my pension is in negative territory?
Joseph

Anonymous said...

Joseph, you took the words out of my mouth. All people who have pensions have invested in hedge funds typically through the most inefficient and expensive route - fund of funds - and they piled in around 2005.

When i used to work at a bank we used to use pension funds to call market tops.

dearieme said...

"dearieme, people who invest in hedge funds are quick to tell others." Well, the ones who are quick to tell others are, indeed, quick to tell others. Perhaps the ones who keep their mouths shut keep their mouths shut?

Anonymous said...

The pension funds also have money in government gilts in a declining currency. Thats another 30% gone.

Man in a Shed said...

No doubt one of my money purchase pension funds has lost my money this way.

I heard yesterday that the Govt may be trying to persuade other institutions (read pension funds) to do some of the risky lending to business it need, to save borrowing going up.

Frankly I think we can all look forward to a future as peasants on a collective farm.

Nick von Mises said...

"If the hedge funds lost money, it is ours"

How more wrong can you be? Hedge funds hoover up inflows from the rich and supposedly sophisticated rather than normal retail investors.

The only way you're likely to have hedge fund exposure is if you went the FoF route, in which case you're a greedy imbecile for paying 3/30 even if the market hadn't crashed.

The rich are the big losers out of the credit crunch because they rely so much more on assets than income for their wealth.

I'm no fan of the rich, but I'm no closet socialist either.

Anonymous said...

"The pension funds also have money in government gilts in a declining currency. Thats another 30% gone."

Eh? If your liabilities are GBP and your assets are GBP, how does a decline in GBP represent "30% gone"?