hedge funds

[VV o n g B a]

i have an opportunity to invest in a young hedge fund. what do u guys know about these funds? are they generally considered riskier than mutual funds? what happens when a hedge fund manager leaves?

[John0101]

I don't like hedge funds, they are only as good as the fund manager. Has the fund manager have any experience running portifilios before? What are his returns over the last decade? Most of the time hedge funds and mutual funds just perform as well or worse then the market. My advice is to buy shares in a S&P 500 weighted average index. On average the S&P500 beats the Dow and Nasdaq. I think over the last 20 years the SP has an average yearly return of 14%, while the Dow and Nasdaq had 10%, 12% respectfully. Keep in mind 14% annual returns are fantastic over the long run, if a mutual fund manager can return 14% on his/her money yearly they'll be making big bux.

Hedge funds might make a lot of money one year, but could as easily lost a lot another year. I wouldn't take the risk just plow your money into an S&P500 weighted average index, add small monthly contributions and give it 20 years and you'll be surpised at how much money you'll have. (keep in mind with 14% annual commulative returns you'll just about double your money every 5 years).

[iris]

I definitely agree with John. Beyond that, hedgefund investors are normally Fortune 500 companies. For example Eliot Capital of NYC manages over $5 billion dollars with clients such as Morgan Stanley. You need alot of money to even get started with a reputable hedgefund. Most have a minimum investment amount of 1 million.

If you have that much money, please please invest it into a safer portfolio. If a hedgefund is offering to let you invest for much less, I don't know how solid of a fund it is.

Where did the hedgefund manager come from? The best firms are in NYC or Greenwich, CT such as SAC, Contratrion, or Eliot.

[VV o n g B a]

it turns out that i wouldn't actually be investing in a hedge fund (i have no where near enuf money)but in a company that maintains a listing of hedge funds or something like that. the only reason i am contemplating it is because i have several thousand in cash sitting in a savings account basically earning me nothing and i've been maxing out my roth and 401k's. the only reason i heard about this is because my roommate has a hedge fund manager friend.

[John0101]

How long do you want to tie your money in a investment? If your in it for the long run ill just buy an index fund for S&P500 (10+ years), short term (3-5 years) buy an index for Dow. All the averages are for long term returns. So the S&P500 index is much more risker then the dow index in the short term. My advice is to put some money in the S&P500 index and make monthly contributions, and don't touch the money for a long ass time. Put the rest in the Dow Jones index and if you need to burn some money you can sell your shares of the Dow index and hopefully with a return.

[ellsworth81]

i agree with everything said above. fund managers usually make less than the S&P index funds - plus you get automatic diversification, which is always a nice benefit. contribute like $20-100 monthly if you can spare the cash and it'll blow up soon enough.

for those of you "technical" investors, do you think now is a good time to get in the S&P ... considering the political turmoil during november elections and this impending terrorist threat? I don't want to invest just before a huge drop.....

[FrankieY18]

i probably wait for a while to see where the economy is going..up or down or stagnant...i don't see any compelling reasons that the market will go up...on the other hand, i think the probability the market will go down is higher...so i probably won't put money in right now...

buy the index fund, but also buy small-cap fund and oversea fund to diversify your portfolio...

[John0101]

i agree with everything said above. fund managers usually make less than the S&P index funds - plus you get automatic diversification, which is always a nice benefit. contribute like $20-100 monthly if you can spare the cash and it'll blow up soon enough.

for those of you "technical" investors, do you think now is a good time to get in the S&P ... considering the political turmoil during november elections and this impending terrorist threat? I don't want to invest just before a huge drop.....

If your investing for the long term, anytime is a good time to invest. But honestly if I knew when the next big drop was gonna be I would be rich beyond belief right now. If you want to day trade or do short term investments in the stock market and want to learn alittle about technical analysis http://stockcharts.com/education/ is a great website to learn. But it really depends on which side of the camp you are in, one theory of random walk derived from the efficient market hypothesis believes that the movement of variable whose future cannot be predicted because they are just as likely to move up or down. Aka you can't predict the future and you can't model it. So short term trading depends only on luck. The other camp is the Dow Theorist who believes it is possible.