This is Murphyesque

We can’t allow hedge funds to grow fat on virus crisis
In these troubled times there is one industry laughing all the way to the bank. It has all the tools and expertise to make a killing at the expense of many others, to absolutely no one else’s benefit.

I refer, of course, to hedge funds and their associates. This is equivalent to racketeering during a war. The only appropriate and fair response is to immediately tax shorting profits at 90%.
Ian Templeton, chief executive, Acorn Capital, Buxton

From the Desk of Rishi
Number 11

Dear Ian,

When you can come up with a workable differentiation between a hedge and a short then come back to us. Until then please bugger off.


The Bloke In Charge.

10 thoughts on “This is Murphyesque”

  1. The Meissen Bison

    What should happen to the other party to the contract? Perhaps sectioning under the Mental Health Act would be the thing.

  2. A hedge is an investment that provides protection against the risk of a fall in the value of another investment in the portfolio. A naked short is a purely speculative investment (which, incidentally, increases the riskiness of the portfolio and should, therefore, never be undertaken by a defensive hedge fund).
    I am *very* confident that Rishi Sunak knows this.
    The question is whether Ian Templeton does.

  3. Surely there is an issue with systemic risk? Any given hedge fund should be allowed to go bust of course if it makes bad investment decisions, but what if the collective investment decisions of the hedge fund industry as a whole are affecting the stability of the entire financial system, thus requiring them to be bailed out for the good of everyone? Surely we should not allow them to get their industry into a state that it can affect everyone else? If they want to do high stakes gambling, why not just let them bet on something that doesn’t interact with the real economy, like the 2:30 at Chepstow, or 23 Red?

  4. ‘We can’t allow hedge funds to grow fat on virus crisis’

    We? WhoTF is “we?”

    Allow? By what authority do you allow anything, whoever the fvck you are?

    A good outcome of the crisis would be to tell all third parties to SFTU.

  5. Call me cynical but I expect Ian is usually fairly hostile to the idea of 90% taxes on investment returns, especially those which affect his own company.

  6. So should I conclude from this wailing that Mr Templeton’s business is not doing too well in the present circumstances?

  7. This idea that hedge funds are intrinsically evil is yet another example of what you might term “the Ely Fallacy”. I am fairly sure that, in a market that is basically moving in one direction, any hedge funds running long-short strategies are not making much money at all. The profits from their short positions are balanced by the losses on their long positions. It would be certain funds running directional strategies that are benefiting, by no means all hedgies. That leads back to the fundamental ways in which hedge fund managers get rich, by charging management and performance fees. A regular 2% of assets and 20% on performance is much more likely to get you wealthy than taking hedged positions.

  8. The Pedant-General

    Also, it is vital that people are able to short – it is what allows the market to express the sentiment that the price of something should fall. If you can’t short, you end up with really really ugly crashes a bit later.

  9. @Jim

    Who buys farmers’ crops in advance giving them certainty – oh, gambling hedgers & short/long speculators

    Gov meddling always makes things worse:

    Thursday: Costa announces take-away only, card-payment only; others had done similar & some had shut on or before

    Friday: Gov announces all must close regardless of risk

    Well done Cheers for defying Totalitarian Gov ‘request’

  10. @The Pedant-General March 22, 2020 at 9:17 pm

    Agree. Inability to short led to 2007/8 crash

    “The Big Short” – once he figured out how to

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