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What the new year may bring
Though I think the stock market still has unfinished business on the downside, I believe that 2009 is the year to prepare for a return to managing money in a more balanced fashion, with longs (and some shorts), as there are plenty of interesting ideas that appear to offer a margin of safety.Compelling opportunities on the short side are not as abundant as they were just a few months ago (though there still are plenty). The "value restoration project," to quote Jim Grant, has been brought about by the consequences of disastrous Fed policies and the madness of the crowd, both of which have concerned me for the past 15 or so years.
Lastly, on a personal note, running a short-only hedge fund is very stressful, nerve-racking and generally not very much fun, entailing an intense focus on the short term to effect risk control. In addition, one views the world differently when operating solely from the short side, and I would like to widen my focus as I did when I managed money from 1982 to 1995. My wife is especially happy about this potential change.
My efforts in 2009 will be directed toward setting up an investment vehicle to be managed by Fred Hickey and me. It won't be a hedge fund and will hopefully be available to everyone.
Many in the "hedge" fund community have behaved in a disgraceful manner in the past couple years by taking huge fees and then either running at the first sign of trouble (by giving back money to avoid having to recoup drawdowns from high-water marks) or locking people up and not giving them their money back at all.
Consequently, I'd rather not be part of that industry going forward. The Contrarian, as well as my daily Market Rap on my site, will continue as they have.
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