- Feb 14, 2002
- 19,688
- 2,811
- 126
Billion dollar?!
- Thread starter ponyo
- Start date
I could never imagine making 1.7 billion dollars in a year or even a freaking lifetime. So does he get taxed for for like 550 million?
There are only very few individuals in the world that come in this category.
The returns they are making are ridiculous.
Even if they earn 15% on average on a $200B fund, and charge a 1% fee, then that is $2B a year.
Pretty ridiculous - but its all about small percentage fees when you deal with that much money.
The returns they are making are ridiculous.
Even if they earn 15% on average on a $200B fund, and charge a 1% fee, then that is $2B a year.
Pretty ridiculous - but its all about small percentage fees when you deal with that much money.
Can somebody explain how hedge funds work? I just know that they have obscene returns but nothing else about them. Aren't they just like mutual funds?
though they have a reputation for big returns, on average hedge funds have fair about as well as the market.
bottom line - its an investment that likely won't do any better than the market, and carries more risk. the successful ones can be wildly successful, but there are many more that can't keep up with the market due to the common employment of aggressive investment strategies.
most hedgefunds are private, they invite specific investors. they escape the oversite of most government investment laws this way and are typically headquartered in tax havens like the caymans.
these funds have very few investors, who each invest sick amounts of money. usually the fund managers invest a great deal of their own money as well. the managers then try to play the market non-stop for a certain amount of time usually defined when the fund is created.
anyone who is more knowledgable in the are please correct me if i am wrong about anything.
these funds have very few investors, who each invest sick amounts of money. usually the fund managers invest a great deal of their own money as well. the managers then try to play the market non-stop for a certain amount of time usually defined when the fund is created.
anyone who is more knowledgable in the are please correct me if i am wrong about anything.
James Simon's fund charges somewhere along the lines of a 4% management fee and 40% of net profit. Himself as well as others that work for the fund probably own a bulk of the assets. On top that he has returned over 30% for something like 15 years even after fees.
Our country makes me sicker every day.
I was just watching an "ESPN classic" show on auto auctions where 100's of millionaires (mostly from investment firms) were spending ~$500k to ~$ 2.5 million on random ****** cars..... and nobody knows of these "richers."
Makes you think twice when you talk ****** about Bill Gates.... who drives a ford taurus and donates ~half his money to the povert.
I was just watching an "ESPN classic" show on auto auctions where 100's of millionaires (mostly from investment firms) were spending ~$500k to ~$ 2.5 million on random ****** cars..... and nobody knows of these "richers."
Makes you think twice when you talk ****** about Bill Gates.... who drives a ford taurus and donates ~half his money to the povert.
- Aug 23, 2003
- 25,375
- 142
- 116
That's nothing. Look at Carlos Slim. He leapfrogged Warren Buffet as the second richest man in the world in less than one quarter.
His net worth jumped $4 billion in the two months following Forbes releasing their 2007 World's Richest list. In the last 18 months, his net worth has increased by $23 billion.
At this pace, he will easily overtake Bill Gates by the end of the year, dethroning him after 13 years at the top.
Barring any natural disasters or acts of God, his virtual monopoly on Mexico's telecom market will probably make him the first hundred-billion-dollar-man by the end of the decade.
His net worth jumped $4 billion in the two months following Forbes releasing their 2007 World's Richest list. In the last 18 months, his net worth has increased by $23 billion.
At this pace, he will easily overtake Bill Gates by the end of the year, dethroning him after 13 years at the top.
Barring any natural disasters or acts of God, his virtual monopoly on Mexico's telecom market will probably make him the first hundred-billion-dollar-man by the end of the decade.
What's funny is that the average hedge fund now has returns no greater than index funds.
Hopefully none of these guys go the way of LTCM.
Hopefully none of these guys go the way of LTCM.
theeedude
Lifer
- Feb 5, 2006
- 35,787
- 6,197
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I hope they paid $400M in taxes on that $1B. Other than that, if the investors in those hedge funds want to give $1B to someone to manage their money, more power to them. It's rich giving money to the rich, and throwing a nice tax bone to everyone else in the process.
i just dont get why these guys should earn so much.... theyre not helping anyone but themselves and thos above them, get richer than they already were.
They should earn that much because people are willing to pay them that much. Running a hedge fund is not the easiest job in the world. I'm wondering what this pay consists of. I'm sure it isn't salary which means they are making so much because they are making good investments.
There's a lot of wrong assumptions and urban legends surrounding hedge funds. In fact there is no definition of hedge fund. Hedge fund just means the fund does not have to disclose anything but to its own investors. In practical terms this means the manager doesn't have to advertise its strategies. Other than that, the term hedge fund doesn't really say anything about how the money will be invested.
Roughly we can divide hedge funds between simple hedge funds and the so called funds of hedge funds. The first ones use capital following a precise strategy, while funds of funds gather capital and simply select hedge funds in which the will invest. This strategy provides an additional layer of diversification.
As far as hedge funds strategies go we can divide them in a few main categories:
1. Long/Short: take long and short position on a variety of markets. Some are specialized, some are not. Usual markets are equity, fixed income and commodities. Almost all trades are carried on a derivative base. Again, every fund has its own strategy and timing.
2. Macro: take positions on currencies and other instruments that capture major macroeconomic shifts. Soros' Quantum capital was probably the most famous among macro funds.
3. Convertible arbitrage: try to capture arbitrage opportunities between convertible stocks and the underling common stock and debt instrument.
4. Event driven: they identify and hold securities of companies likely to be M&A targets or likely to undergo major restructuring.
5. Emerging markets: like EM mutual funds but with the knowledge necessary to invest in turbulent markets where often mutual funds are not equipped to enter. Sometimes they use private equity strategies. Many focus on emerging markets real estate.
6. Distressed Debt: buy fixed income instruments of sovereign and corporate debt close to defaulting and so trading at a discount, or buy defaulted debt capturing the spread between the current price and the recoveries.
6. Private equity funds and Funds of private equity funds: often called hedge funds these days. De-list companies and take them private. Then inject management and try to return the company to profitability and resell or re-list the company later.
7. Structured credit: use securitization techniques like CDOs to create and resell asset backed securities. The fund itself usually holds the equity share and uses the senior tranches to finance itself.
8. Contrarian: structure their portfolios to be beta-negative. They are usually used by funds of hedge funds to hedge against market risk.
All of them usually advertise a target return. The point is not having high returns, but consistent ones. That's why they often do not beat mutual funds. A lot of funds of funds target a 7-10 percent annual return with a zero-beta portfolio. That's the key. It's extremely hard to keep zero beta, and that explains why hedge funds managers can command huge fees.
There is also a major misconception about hedge funds investors. Most people out of the industry think most of the investors are high net-worth individuals. In fact they do not make up 10% of the market. Most investors are institutional: university and municipality endowments, charities etc
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