Monday, November 3, 2014

OPM: Other People's Money

ZH: Nov. 3rd, 2014
Unhedged funds were obliterated in October
"Someone" soiled their underwear and reached for protection at the bottom of the steepest short-covering rally in years

The average hedge fund was down -1.7% in October compared to the S&P which gained 2.3% in October. A massive 4% performance gap a mere 8 weeks from bonus time. 

Singularly correlated hedge funds were shorting the Russell 2000 small cap index which had been underperforming all year until it rose 11% in three weeks (see below).
 “The only way you’re going to pick up performance is by being fully invested.”

“In the next two months, we’re going to see people add a lot more risk and that’s going to help the market rise.”

Russell 2000 Small Cap
Now versus 2008: 
Single left shoulder, double head, double right shoulder. 
So far, so bad...


Well, as long as it's someone else's money, why not?