Outlook: The hedge fund's time could be up
Friday 25 September 1998
Concern has been expressed in three ways. Regulators were worried because hedge funds are unregulated. Market pundits were concerned because hedge funds are high-risk enterprises which because of the leverage they apply in markets pose a significant risk to the health of the financial system as a whole. And finally, the politicians are drawn in because hedge funds are seen as the ultimate market speculators whose activities are often blamed for speculative booms and subsequent busts.
None of these warnings seem to have stopped some of the world's best known banking names - including our own dearly beloved Barclays - becoming involved with John Meriwether's Long Term Capital Management, either as lenders or investors - and presumably a string of other hedge funds too. As it happens, LTCM was regarded as one of the safer hedge funds, so heaven knows what's going to happen to the rest.
Every business cycle comes to an end for a different set of reasons. If bankers could anticipate them, then there would be no cycle. Even so, those caught up in LTCM and other hedge funds really only have themselves to blame for the losses now being chalked up. Anyone that comes offering 30 per cent-plus returns a year cannot be for real.
Inevitably the hedge fund debacle will prompt calls both for a regulatory crackdown and for the activities of hedge funds to be made more transparent.
But as ever, the politicians are several steps behind the market. Nobody in their right mind is going to lend to or invest in these things after what's just happened. The hedge fund's time is probably already up, with or without regulatory action.
Brits who migrate to Costa del Sol more unhappy than those who stay at home
LAPD releases haunting crime scene photos from its archives
Peaches Geldof funeral: Bob Geldof leads tributes at emotional service in same Kent church she married her husband Thomas Cohen and her mother Paula Yates was buried
Duke and Duchess of Cambridge photographed with Prince George off-duty may spark privacy row
Malaysia Airlines flight MH370: Concerns grow among search officials that missing jet ‘may have landed somewhere else’
Ukip election posters: Nigel Farage defends 'racist' campaign anti-immigration campaign ahead of Europe elections
Is Britain really a land of God? Furious debate after David Cameron claims we are a Christian country
An open letter to Nigel Farage: you may smile, but I am not seduced
'Sinful': Video of British Muslims dancing to Pharrell Williams's hit Happy comes under attack
David Cameron's constituency office calls police on food bank campaigners Bishop of Oxford and Reverend Keith Hebden
David Cameron 'fostering alienation and division' by calling Britain a 'Christian country'
- 1 Revealed: Scientists ‘edit’ DNA to correct adult genes and cure diseases
- 2 David Cameron's constituency office calls police on food bank campaigners Bishop of Oxford and Reverend Keith Hebden
- 3 A bottle of wine a day is not bad for you and abstaining is worse than drinking, scientist claims
- 4 Women take on Bear Grylls over 'sexist' male-only desert island show
- 5 Malaysia Airlines flight MH370: Concerns grow among search officials that missing jet ‘may have landed somewhere else’
iJobs Money & Business
£90000 - £110000 per annum + full Package: Harrington Starr: Director of Cons...
Negotiable: Harrington Starr: Automation Test Manager (C#, C++, VB.NET, QTP, M...
£20000 - £26000 per annum + benefits+bonus+package: Harrington Starr: Data Qua...
£25000 - £32000 per annum: Harrington Starr: Graduate Developer/QA - (Java, C+...