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Things that probably aren’t true

Even so, and even by the standards of the super-rich, the profits the hedge fund Citadel racked up last year is still a lot of money.

Profits are booming, not just at Citadel but right across the industry. The ‘hedgies’ are minting fortunes for themselves on a scale that has not been witnessed since the early noughties. And yet, while that is great for the traders involved, and probably for their wives’ divorce lawyers as well, it is nothing for the rest of us to celebrate.

Specific hedge funds did make fortunes, yes. And others lost fortunes. Tiger Global lost 54% last year.

The sector as a whole may or may not have been in profit over the year. In fact, in recent years the sector as a whole has been making below normal (ie, the usual return to capital across the economy) profits.

Just as we’d expect from a mature sector coming down off a rapid expansion.

And we’re never going to get a decent view of the world if we fail to distinguish between certain market participants and the market itself now, are we?

8 thoughts on “Things that probably aren’t true”

  1. The Tel does have some reliable plonker-writers in the financial pages. I exempt The Blessed Ambrose from that category because he’s so erratic that he succeeds in being interesting sometimes.

  2. I wonder what the split is between profits made dealing on their own account and the ‘fees’ they charge those who invest with them. Their business model is remarkably similar to the horse tipsters who feature in Damon Runyan’s Broadway tales – tell you which horse to back, charge a nickel on the dollar to place the bet, and take 10% of the winnings if it comes in (and if it doesn’t come in, “you ain’t seen me, right?”)

  3. “. I exempt The Blessed Ambrose from that category because he’s so erratic that he succeeds in being interesting sometimes.”

    AEP has been writing his Serious Prognostications™ in the DT for 30 years now. I used to think (when I was young and impressionable) that he was someone with some great insight, when in reality he just churns out identical boilerplate columns that make it sound like some sort of ‘Seismic Event’ is happening, or that he has personally identified some new economic fault line of great significance. When in fact 99% of the ‘significant events’ he had identified previously were nothing of the sort. I suspect he’s actually a bot. And whoever writes his column he/it has certainly bought the net Zero Cool Aid, and for that reason alone I discount everything else in it. If his judgement is that off that he thinks all the Green nonsense is real, everything else he writes has to be suspect.

    In fact I’ve now come to the conclusion if AEP is writing on the significance of something you can discount its relevance entirely. I get a better heads up of whats happening in global economics from Zerohedge. Loads of tin of course, but there’s gold in them there webpages too. You just have to be able to discern one from t’other.

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