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Tuesday, January 8, 2013

Quantitative Hedge Funds Down for Second Year

I have laid out the blueprint for the Lockheed Martin project and take a short break. I ask my assistant to bring me some coffee and she swirls into my office a few moments later. She looks at me and asks how long I have been at HQ without heading home for a good night of sleep. That is a very good question. She comments that is seems like I have been focused too much with the workload here and that I have neglected my private life which is not good for my healthy balance.

I smile at her and nod in agreement. She puts the coffee on my table and tells me that I should head home for the rest of the day and get some rest. I tell her that I will think about it and she sits down on the couch and pulls out here phone to make a call. I monitor her as I have this feeling that she is up to something. She makes reservations at one of my favorite restaurants for four people.

I was about to ask her what she had in mind and she told me that it was a surprise and that I should trust her judgement in this matter. She exits my office and as the door closes I hear here say that it was another bad year for quantitative hedge funds. I am happy that I have hired her as my personal assistant as I got so much more with her.

I check my e-mail and she did send me a summary on the report about quantitative hedge funds and how they have reported a second year of losses as an industry. The smart money industry is divided into to main camps. One is the private equity space and the second one the hedge fund industry. There are several different hedge fund categories out there and quantitative hedge funds have emerged as the most popular amongst investors who poured over $108 Billion into this hedge fund sub-sector over the past 48 months.

Quantitative hedge funds have accumulated great returns, but struggled the past two years as markets have been manipulated by politics and central bank intervention which have distorted the natural path of markets and chart patterns as well as trends have been corrupted by socialists. As with any anomaly in financial markets, this socialist-dumbnundrum is and will be temporary.

Financial markets will resume their natural path as early as this year and quantitative hedge funds should be able to knock it out of the park by the time we set up Christmas Trees this year. Just because the entire sub-sector has reported losses does not mean that individual managers did not have a good year. Our preferred fund has reported a 50.26% gain for 2012 which was much lower than the previous year and an apology for what was referred as a bad performance has been issued.

The trading environment has been difficult in 2012 with plenty of interference from the far left which tried to unleash their regulators over the smart money industry. They barked a lot, but as they say: A dog that barks does not bite! 2013 should shape up as a much better trading environment as global financial trends will attempt to return to their patterns and force out the pesticides which have infected the health of the global financial system.