Politicians and journalists often express concern about the size and influence of hedge funds. But a Congressional hearing with big-name hedge fund managers, including George Soros -- the same week that AIG’s
It is banks and former broker-dealers (such as Citigroup
I haven’t even gotten into the huge responsibility of regulators and lawmakers themselves. It was members of Congress, for example, who inhibited the proper oversight of government-sponsored mortgage companies Fannie Mae
Joseph Schumpeter referred to capitalism as a process of creative destruction. Think of the hedge fund industry as a hyperkinetic form of capitalism. I talked to Guillaume Rambourg, who co-manages the $2.6 billion Gartmore AlphaGen Capella fund; he said he wouldn’t be surprised to see the number of long/short European equity funds fall from around 650 at the start of 2008, to half that number by the start of 2009!
Lightly regulated capitalism does its job in this industry, which has never been the object of a government bailout (that includes Long-Term Capital Management). Instead of grandstanding, lawmakers should focus on the real culprits in this crisis. And when it comes to hedge funds, they should be very careful while waving the blunt knife of regulation.
Hedge funds have had a rough time recently. Here are my thoughts on how to profit from hedge fund selling.