rs261
charla…you say
Because of the deregulation that started with Reagan, we’ve had no regulatory control, especially over the “new financial institutions”, such as hedge funds.
That all depends on what you call a hedge fund. I work for a “hedge fund” that trades in futures…as a futures fund, we are HIGHLY regulated, more so then mutual funds or other stock funds.
The problem with bear sterns and the other collapsing mort companies isnt because of regulations, its because they decided to over leverage themselves. Some mort companies trade at a leverage of 30-50 to 1…meaning they can reap in huge profits or take massive losses if the market moves against them. (ie trading 100 dollars like 3k-5k). They had it good when the markets were easy to predict, but now that things turn south, they get hammered.
The Wall street journal and other newspapers paint hedge funds as the worst thing out there, when in reality they are a necessary part of the market, they actually REDUCE volatility, and greatly help in the liquidation side of assets.
As always when people invest they need to not just look at the pretty charts, but they have to study the statistics of the fund, if something doesnt look right, there is a reason for it. If people see 50-60% returns in a year thats great…but they also need to realize that that can also generate 50-60% losses in a year as well.
if you need/want any more information I’d be more then willing to try my best to answer questions. I’m by no means an “expert” on trading, I’m a software guy who just happens to have passed the Series 3 Futures examination recently, so I have a whole mess of information I’d rather dump out of my head right now.