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What’s the Deal With Hedge Funds?

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We’ve all heard this before, but here is the Financial Times on the performance of hedge funds last year:

Hedge funds run by GAM, Schroders and BlackRock delivered significant losses in 2018 as declines for stock markets globally and rising US interest rates led to widespread difficulties for alternative managers….Only 16 hedge funds were able to deliver positive returns before fees in 2018 from a universe of 450 monitored by HSBC’s alternative investment group.

Only 16! In fairness, 2018 was a tough year for the stock market. But it wasn’t a tough year for everything. After all, year-end GDP growth was most likely above 3 percent, the best growth number since before the Great Recession. There was certainly money to made somewhere. For example:

If you just dumped all your money into an S&P 500 index fund, you would have done poorly. But if you’d thrown some darts and picked four or five funds in a variety of areas, you would have made money and paid a management fee on the order of 0.5 percent.

Of course, hedge funds are supposed to be much smarter than this. They also have access to far more investment opportunites than just the mundane mutual funds that us financial schlubs are limited to. And they charge enormous fees: typically 20 percent of gains plus 2 percent of the total fund assets. Since nearly all of them lost money in 2018, we can ignore the 20 percent profits fee, but they’re still getting that 2 percent assets fee.

So: invest in schlub funds and earn, maybe, 2 or 3 percent with a 0.5 percent management fee. Invest in a hedge fund and lose 2 or 3 percent plus a 2 percent management fee.

If this were a one-year deal, it wouldn’t matter. But we hear this year after year after year: the average return on hedge funds is almost always lousy. And every year we schlubs scratch our chins and wonder what’s really going on. Why do super-rich people invest in these things?

And every year we don’t get an answer. So there must be something else going on. The super-rich aren’t stupid. They aren’t investing their billions year after year in funds that do worse, on average, than a workaday blended equity/debt fund from e-Trade or Vanguard.

So seriously, what’s going on? Are hedge funds really as bad as they seem to be? Or is there something that all the hedge fund critics are missing?

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benzado
1 day ago
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Are they make-work programs? Do they cater to dumb people with inherited wealth?
New York, NY (40.785018,-73.97
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How Can Trump Supporters Support This??? But They Do So He Is Golden!!!

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The "people who like Trump like Trump" window of analysis onto this administration has always been stupid(and it comes from liberals and neverTrumpers, too, not just journalists in diners). It both suggests that people are crazy for supporting him, and also that their support is the only thing that matters. Neither is actually true. Sure his MAGA fans are horrible crazy people, but most of the rest are just "eh, Republican better than Democrat, good enough for me" which is bad but it is bad because Republicans are bad, not because Trump is especially bad. He is, but I don't think it's crazy they think he's worse than PRESIDENT RANDOM DEMOCRAT given their worldview.

I suppose it's interesting to wonder what would pull Trump's support down from 40% to 27%, but really 40%ish of this country would support almost any Republican and 27% would support any. This is a conversation about 13% of the population.
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benzado
5 days ago
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Young

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In a lot of ways our concept of "young" keeps get ratcheted up. Maybe it's because people get married/have children later. I'm not sure. I don't remember people who were 30ish being thought of as "young" when I was 30ish.


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benzado
9 days ago
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"Should parents read their daughter's texts or monitor her online activity for bad language and inappropriate content?"

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demigoddities:

cryoverkiltmilk:

get-yr-social-work-rage-on:

intersectionalparenting:

isitscary:

daeranilen:

daeranilen:

daeranilen:

Earlier today, I served as the “young woman’s voice” in a panel of local experts at a Girl Scouts speaking event. One question for the panel was something to the effect of, “Should parents read their daughter’s texts or monitor her online activity for bad language and inappropriate content?”

I was surprised when the first panelist answered the question as if it were about cyberbullying. The adult audience nodded sagely as she spoke about the importance of protecting children online.

I reached for the microphone next. I said, “As far as reading your child’s texts or logging into their social media profiles, I would say 99.9% of the time, do not do that.”

Looks of total shock answered me. I actually saw heads jerk back in surprise. Even some of my fellow panelists blinked.

Everyone stared as I explained that going behind a child’s back in such a way severs the bond of trust with the parent. When I said, “This is the most effective way to ensure that your child never tells you anything,” it was like I’d delivered a revelation.

It’s easy to talk about the disconnect between the old and the young, but I don’t think I’d ever been so slapped in the face by the reality of it. It was clear that for most of the parents I spoke to, the idea of such actions as a violation had never occurred to them at all.

It alarms me how quickly adults forget that children are people.

Apparently people are rediscovering this post somehow and I think that’s pretty cool! Having experienced similar violations of trust in my youth, this is an important issue to me, so I want to add my personal story:

Around age 13, I tried to express to my mother that I thought I might have clinical depression, and she snapped at me “not to joke about things like that.” I stopped telling my mother when I felt depressed.

Around age 15, I caught my mother reading my diary. She confessed that any time she saw me write in my diary, she would sneak into my room and read it, because I only wrote when I was upset. I stopped keeping a diary.

Around age 18, I had an emotional breakdown while on vacation because I didn’t want to go to college. I ended up seeing a therapist for - surprise surprise - depression.

Around age 21, I spoke on this panel with my mother in the audience, and afterwards I mentioned the diary incident to her with respect to this particular Q&A. Her eyes welled up, and she said, “You know I read those because I was worried you were depressed and going to hurt yourself, right?”

TL;DR: When you invade your child’s privacy, you communicate three things:

  1. You do not respect their rights as an individual.
  2. You do not trust them to navigate problems or seek help on their own.
  3. You probably haven’t been listening to them.

Information about almost every issue that you think you have to snoop for can probably be obtained by communicating with and listening to your child.

Part of me is really excited to see that the original post got 200 notes because holy crap 200 notes, and part of me is really saddened that something so negative has resonated with so many people.

I love this post.

Too many parents wonder why their kids aren’t honest with them, and never realize their own non-receptive behavior and their failure to listen are the reasons why.

At one point or another, a child WILL keep a secret from you, but if it’s to a point where all their emotional feelings are being poured away from you as opposed to toward you, it’s probably because you haven’t been emotionally trustworthy or open. 

Adultism :(

not to mention, you then take away one of your child’s coping mechanisms. if your parents read your journal, you’re never writing in it again. if your parents monitor your conversations with friends, you won’t tell them when you’re depressed anymore. if you have a therapist that reports what you say to your parents, you won’t tell that therapist anything. now all those methods of venting, feeling better, self-soothing, sorting out your issues, and feeling safe are gone.

“i want information” is not synonymous with “i want my child to talk to me.” those are two separate goals, but i think parents conflate them – i want my child to talk to me, but since they won’t, i’m stealing information from them. no. you didn’t ever want them to talk to you. you wanted information. if you wanted them to talk to you, if that was your entire end goal, you would have approached things completely differently. stealing information from a child ensures they will never talk to you again. but if all you want is information, then you can take it however you want and call it a parenting success.

if what you wanted was a child who talks to you, you would apply the same principles you do to literally any other human interaction in your life, and cultivate a relationship and trust.

I had to stifle my horror and revulsion at my last job, when a conversation about removing the door from a child’s bedroom came up, and I was only one not in favor of it.

May be worth noting I was the only millennial in a conversation that was otherwise full of baby boomers.

See, children are humans! They need their privacy.

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benzado
14 days ago
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New York, NY (40.785018,-73.97
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sarcozona
13 days ago
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OMG no. Don't read your kid's texts or emails or diaries or letters you surveillance asshole parents.

Don't Know Nothing

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One can't always distinguish between the lies, the shifting incentives, and the ignorance. And Trump is right sometimes even when he's wrong!

He's right about the Fed chair. The Fed's basic stance wavers between hawks who want to raise interest rates because inflation is always lurking around the corner to make rich people a bit less richer, and doves, who want to raise interest rates so that they will have room to cut interest rates to cure the next recession that the increased rates cause. Trump is right that rate increases are dumb. Also he, like every other posing conservative/Republican, once demanded that the Fed raise in interest rates yesterday, and in an especially manly way, not in a girly Janet Yellen way.

I don't know what to make of his strong dollar gibberish. Like many people Trump thinks a "strong dollar" is good because it's our dollar and strong is better than weak. It isn't that simple. Also like many (of the often same) people Trump has been very mad a China's "currency manipulation" which involves China manipulating the dollar to make it stronger. I've never quite known what people who think like this actually think, or how to resolve this basic contradiction.,
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benzado
20 days ago
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Donald Trump Did Two Things Right This Week

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“Do you think Donald Trump has done anything right?” a friend asked me a few months ago. That was a tough one. Aside from trivial stuff, I think I eventually conceded that China really did deserve some tougher trade treatment and that the AT&T/Time Warner merger deserved to be stopped. Trump did both of these things for the wrong reasons, and in the case of China screwed up the execution epically. But I more-or-less supported the underlying concept behind both of them.

This week added two more items. First, Trump decided to withdraw from Syria. Once again, he did it for the wrong reasons, and there’s every reason to think he’s going to execute his decision as badly as possible. Still, I basically agree with him that we should never have been there and should pull out now even if it means accepting some ugly consequences.

Today brought the fourth item. After finally figuring out what James Mattis’s resignation letter really meant, Trump moved up Mattis’s final day in office to December 31 and replaced him with Deputy Secretary of Defense Patrick Shanahan. This was the right decision for two reasons. First, Mattis really had no right to set his own resignation date in the first place. He should either have consulted Trump about it or else simply resigned and allowed Trump to name the date. Second, Mattis wrote a truly brutal resignation letter. Trump was too dumb to figure this out for a while, but once he did he had no choice but to get rid of Mattis as soon as possible. It’s simply not possible to keep working with a Defense Secretary who has publicly declared that he believes his commander-in-chief is too soft on our enemies, too contemptuous toward our allies, and pays too little attention to national security and American values. Mattis may have said these things diplomatically, but he said them.

So there we have it: two more things Trump has done that I agree with. As usual, he did them badly and for the wrong reasons, but at least he got them right.

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benzado
22 days ago
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New York, NY (40.785018,-73.97
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