Hedgehogs Ravaged by Bears

THERE IS MUCH TO BE LEARNED FROM BERNIE MADOFF, don???t give up on him.

What if a letter written by Bernie Madoff explaining himself was discovered?
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http://pacificgatepost.blogspot.com/2009/01/bernie-madoff-letter-of-explanation.html
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???.in his own words? Now get the subpoena requests out.

Hedge funds had ... 'Leverage' to reuse a cable TV show promo. Now that ... 'Leverage' is leveraged in the wrong direction for the near future. Oops. Hedge funds didn't hedge. They didn't seem to know any more about the state of the financial industry than anyone else did, and they were about the biggest sector of the equity market. The de facto deregulation put the whole system in the position where no one could see the level of potential damage, since much of the bad debt was completely off the radar to anyone outside of the holding company. This is where both deregulation and the original AIG Financial Services models break down completely. Deregulation meant that $3 trillion in assets went unseen by the public and government. It also meant that the FS model used by AIG, then everyone else, had to fail. You can't model something that you can't see. Eash investment company could see and model their own assets, but couldn't see everyone else's bad assets to put into the model's engine. The computer models' engines ended up like running a Ferrari engine on Venezuela crude. Everyone's models ended up with the old GIGO (garbage in, garbage out) computer problem.

The future will require absolute risk management. The speculator (aka - buy & hold & pray) as well as the diversified investor will seek to reduce risk. A Defined Risk Strategy will likely draw more investors. Randy Swan wrote, "..stock with a reasonable amount of protection and income generating opportunities are you only real bet..." It is unlikely the future will deliver the same type of bull markets that led investors to hedge funds.

The future will require absolute risk management. The speculator (aka - buy & hold & pray) as well as the diversified investor will seek to reduce risk. A Defined Risk Strategy will likely draw more investors. Randy Swan wrote, "..stock with a reasonable amount of protection and income generating opportunities are you only real bet..." It is unlikely the future will deliver the same type of bull markets that led investors to hedge funds.