This reminds me of http://www.boston.com/bostonglobe/ideas/articles/2011/01/09/... in that here we have a person who successfully called big extreme things (PayPal, Facebook, rising oil prices, the economic collapse) but yet has, in aggregate, lost almost 2/3 of his investors money with his predictions.
During 2008, he gained 59% in the first 6 months, lost 40% during the second 6 months, and so was only down about 4.5% for 2008. He then lost another 25% during 2009. The fund is down 65% from it's peak (Jun 2008), so investors only lost 65% if they bought into the fund in July 2008 and pulled money out in Dec 2009.
An investor who got in on Jan 1, 2008 is only down 30%, and an investor who got in in 2002 has gained 12%/year.
what should they be correcting? Everyone who stayed with him since mid 2008 has lost 65% of their net worth they had in Clarium as of 2008.
However, considering that Clarium assets under management are down from about $8bn to about $2bn, that's only about 25% of investors since the peak (assuming everyone invested equal sums of money at the same point in time - most certainly not true).
people should first learn to read financial journalism correctly before sending "corrections" back :)
The second paragraph clarifies that "clients who stuck with him suffered losses of 65 percent from the mid-2008 peak."
I was just making the point that giving Thiel your money wasn't necessarily a bad move. He has failed to properly manage at least one of {volatility, investor's expectations}, but he has still made 12%/year.
I am no market genius, I do alright, but how do you lose 23% in 2010? or how did he not make a killing in 2009? Those were two of the best stock years in this decade and going back to the Great Depression aftermath the last century (barring the tech bubble).
Also, if they warned of the housing bubble, did they do nothing to protect assets? The losses should have stemmed around 20-40% if they knew that.
sigh Here we go with the "predicted" housing bubble again:
If I make 10 predictions per day, per year, statistically one of them will probably come true. Get mainstream media involved, ignorant "financial" bloggers, etc. and suddenly I'm a freaking genius who predicted something long before anyone else did!
This doesn't make me start, trustworthy, or anything else, and it certainly doesn't warrant investing billions of dollars with.
His fund is investing in much more than just stocks:
His fund seeks to profit from broad economic trends by trading everything from currencies to commodities, a strategy known as macro investing. Such hedge funds returned an average of 2.2 percent last year, 12.6 percent in 2009 and 5.9 percent in 2008, according to data compiled by Bloomberg.
...
The bulk of Thiel’s losses last year came in April, June, September and November. The Clarium fund declined 6.5 percent in April, as losing bets in U.S. equities and overseas debt offset gains made in commodities, according to an investor letter. Two months later it slumped 7.7 percent through stocks and currencies.
The biggest losses came in September, when the fund slumped 8.4 percent on stock bets, according to a letter. Two months later Clarium dropped 7.8 percent because of currencies and fixed income.
...
In October, the Clarium fund had a gross exposure to currencies of 33 percent, which increased to 45 percent the following month.
Not everyone is 'long' in stocks (betting they go up). So it really doesn't matter if a year is the 'best' (for those 'long'); it matters the specific positions held.
Yes hedge funds are notorious for liking volatility along with HFT algorithms, so steady bull markets maybe not so much. I realize people are bull/bears long/short call/put etc. However, hedge funds really should have made more than most in 2009/2010 unless leveraged and caught in the financial housing special products or overseas in EU rather than in other better performing diversifications. Hedge funds usually just like 'movement' or volatility to play off of. However a solid bull market is just as easy as a solid bear market to make money in especially for the leverage they have in volume/size of the funds.
Predictions of events occurring are quite easy to make. Predicting the exact timing of those events in order to make money from trading on them is much more difficult and risky.
Predictions of events occurring are quite easy to make. Predicting the exact timing of those events in order to make money from trading on them is much more difficult and risky.
I'm waiting for some honest soul to start the Lightning Strikes Twice Fund. Whenever someone succeeds massively, intellectually we may "know" that there's a great deal of randomness in that but instinctively we want to believe it must have happened because they are smarter, better, etc. So for their next venture we throw our money at them hoping lightning will strike twice. This phenomenon is most acute where markets are most efficient, such as in the stock market.
Don't laugh - VCs enjoy people with past success which is the same as saying "lightning strikes twice" - for both some type of filter and personal reputation hedging.
...unless you consider financial markets to be sufficiently complex that individual success is unlikely to be correlated to good decisions. It's more difficult to say the same of successful entrepreneurs.
That's not a bad idea at all, if it possible to somehow short a fund. On average, the new best-performing funds each year will invariably do worse the next year, just because on average they were lucky to do so well in the first place. But investors will be more drawn to them than to the funds that performed worse.
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[ 3.9 ms ] story [ 52.8 ms ] threadDuring 2008, he gained 59% in the first 6 months, lost 40% during the second 6 months, and so was only down about 4.5% for 2008. He then lost another 25% during 2009. The fund is down 65% from it's peak (Jun 2008), so investors only lost 65% if they bought into the fund in July 2008 and pulled money out in Dec 2009.
An investor who got in on Jan 1, 2008 is only down 30%, and an investor who got in in 2002 has gained 12%/year.
However, considering that Clarium assets under management are down from about $8bn to about $2bn, that's only about 25% of investors since the peak (assuming everyone invested equal sums of money at the same point in time - most certainly not true).
people should first learn to read financial journalism correctly before sending "corrections" back :)
I was just making the point that giving Thiel your money wasn't necessarily a bad move. He has failed to properly manage at least one of {volatility, investor's expectations}, but he has still made 12%/year.
Also, if they warned of the housing bubble, did they do nothing to protect assets? The losses should have stemmed around 20-40% if they knew that.
If I make 10 predictions per day, per year, statistically one of them will probably come true. Get mainstream media involved, ignorant "financial" bloggers, etc. and suddenly I'm a freaking genius who predicted something long before anyone else did!
This doesn't make me start, trustworthy, or anything else, and it certainly doesn't warrant investing billions of dollars with.
His fund seeks to profit from broad economic trends by trading everything from currencies to commodities, a strategy known as macro investing. Such hedge funds returned an average of 2.2 percent last year, 12.6 percent in 2009 and 5.9 percent in 2008, according to data compiled by Bloomberg.
...
The bulk of Thiel’s losses last year came in April, June, September and November. The Clarium fund declined 6.5 percent in April, as losing bets in U.S. equities and overseas debt offset gains made in commodities, according to an investor letter. Two months later it slumped 7.7 percent through stocks and currencies.
The biggest losses came in September, when the fund slumped 8.4 percent on stock bets, according to a letter. Two months later Clarium dropped 7.8 percent because of currencies and fixed income.
...
In October, the Clarium fund had a gross exposure to currencies of 33 percent, which increased to 45 percent the following month.