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Hedge Fund Woes May Just Be Beginning; Watch for Year-End Sell-Offs
As reported in Barron's, 10/12/98, most hedge funds don't allow customers to withdraw their money on demand. Instead, they allow quarterly withdrawals, at the end of the quarter, or annual withdrawals, at the end of the year.
That makes December 31, 1998 a dark cloud. Hedge Funds are huge - about $175 billion invested in 3,000 Hedge Funds across the globe.
Concerns are mounting. As Barron's stated, "Investors' concerns about the mounting losses at some Hedge Funds have been multiplied by emerging evidence that many Hedge Funds strayed far from their stated investment strategies".
The problem especially is acute because Hedge Funds were sold to conservative entities, such as college endowments, as an investment vehicle less risky than the overall stock market, and not correlated to the overall stock market.
And, more Hedge Funds - besides long term capital - are reporting losses. For example, for September, Julian Robertson's Tiger Management - with $20 billion under management - lost 10% due to a failed bet on shorting Japenese Yen.
Stay tuned, and fasten your seat belt!
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