Willy Today

OMG! Short selling! It\’s an outrage!

Twit. It adds liquidity to the market which is something we want. It\’s also hardly new, been around for donkey\’s years. Further:

The scale of speculation is eye-poppingly huge. Since Hedgestock, hedge funds have become ever more important. The worldwide industry manages £1 trillion of assets and a leading hedge fund manager told me they are only a third into their growth cycle – another £2 trillion is to come.

Is that large?

When they were small you could argue they were a justifiable irritant, challenging and punishing governments and companies alike, who had got themselves into unsustainable financial positions. But now they are becoming the mainstream, degrading the operation of capitalism, turning it into a casino, reducing people\’s lives to the chips.

A trillion?

The world\’s financial assets reached a record $140 trillion worth of stocks, bonds and other financial assets as of 2005, more than three times as large as the total worldwide GDP, according to a study by McKinsey & Co.,

Well under 1% of global financial assets. No, I think we\’ll categorise that as small shall we?

4 thoughts on “Willy Today”

  1. So Much For Subtlety

    Who wants to bet he is just upset because his wife’s property “investments” (not speculation! God forbid if she was buying up property with borrowed money in expectation it would rise in price!) got hosed and the family is now “hard up”? Well for an Upper Middle Class Master of the Universe anyway. Must hurt to see all that cash evaporate.

    To be honest I think his new views go very well with his role at the LSE – I think he ought to lecture them on the perils of the market and how, you know, it can go down as well as up. Keep them on their toes.

  2. Hedge funds exist to exploit irregularities / inefficiencies in markets. Bydefinition they can only ever be a minority sport.

    As for anone that makes a living from shorting shares, they are worth every penny. It is far the riskiest trading stratey there is. I would rather take part in a cage fight.

  3. As for anone that makes a living from shorting shares, they are worth every penny. It is far the riskiest trading stratey there is.

    Well, except that they get a big bonus when they make money and paid to leave when they lose money – so the net risk to the trader is zero…

  4. ‘Hedge’ fund is a misnomer; many funds thus called are not involved in hedging.

    And john b, in an ordinary brokerage firm there is little risk to the traders themselves. If a big trade goes south you get the sack, and that’s it. The risk in private equity firms is carried by the backers, and given the gearing that a lot of these funds involve, that risk is very serious indeed.

    Short selling is as old as the hills. By giving access to market positions that would not otherwise be available, it increases market efficiency and reduces risk.

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