It's the end of the year so let's see how hedge funds

<p>Have been doing...</p>

<p>After all...hedge fund managers get to take advantage of carried interest....getting paid on paper profits, pay lobbyists so they can trade on inside information, etc...</p>

<p>Hmmm...not so good...</p>

<p>Tough</a> Markets: Punishing Hedge Funds Since 2003 - MarketBeat - WSJ</p>

<p>"Money invested in hedge funds since 2003 would have generated a return of 18% through November, according to data compiled by Hedge Fund Research. That puts it far behind the Standard & Poor’s 500-stock index, which has generated returns of 29% over that same period, once dividends are factored in, according to Simon Lack of SL Advisors. The hedge fund underperformance is even starker when placed next to a small basket of investment grade corporate bonds, as measured by the Dow Jones Corporate Bond Index. That benchmark has gained 77% since 2003."</p>

<p>I am of the opinion, a lot of Hedgie success is right time,right place....Guys like Paulsen who made a bundle shorting the real estate/mortgage debacle, have looked foolish on bets this year...funny thing is Corzine's losing bet on european debt has shown to be a decent bet,but too late for him....Nobody beats Mr Market for any significant time periods..problem with hedge funds such as Paulsens,is that they are successful,which draws in more money to be invested,and history has shown large hedge funds are not as nimble as smaller ones, hence tough to be as successful</p>

<p>"Entering the home stretch for 2011, a couple of things are readily apparent about hedge fund performance. One of them is the old adage that while form may be temporary, class is permanent. During a year when most portfolio managers will lose money and the HFRX Global Hedge Fund Index will end down about 8%, a number of the leading hedge fund brands have produced the best performing strategies. "</p>

<p>As usual - Simons is the outlier</p>

<p>Yeah.....Simons ;).</p>

<p>Timing is crucial....</p>

<p>smartest guy in the room</p>

<p>Probably....</p>

<p>"Jim Simons' Medallion Fund is the best hedge fund we have come across. The fund's returns are so spectacular that Jim Simons became one of the richest people on the planet. Medallion Fund employs high-frequency trading and exploits inefficiencies in the stock market. One strategy they use takes advantage of the inefficiencies in the execution of large transactions.</p>

<p>One of their algorithms determines whether a very large order is executed and front-runs it. As a result Medallion experiences high transaction costs and high expenses. That's why they charge a 5% fixed
fee. On top of that they charge a performance fee. That fee had been 20%, but after 2000 it was increased initially to 36% and then to 44%."</p>

<p>These algorithms are under attack but so far...Simons is winning...</p>

<p>Just one example...</p>

<p><a href="http://www.tradersmagazine.com/news/knight-high-frequency-109499-1.html%5B/url%5D"&gt;http://www.tradersmagazine.com/news/knight-high-frequency-109499-1.html&lt;/a&gt;&lt;/p>

<p>for a guy who has mathematical theorems with his name on it and a bunch of physicists (the smartest group of people around) and mathematicians, he's done pretty well!</p>

<p>There are a few geniuses that manage to consistently and significantly outperform the market over long periods, but most of these money manager characters aren't nearly as smart or skilled as they think they are. </p>

<p>Some got lucky with timing once and then let it go to their head setting up for a massive crash. </p>

<p>The number of money managers that can consistently outperform standard indices or the mega mutual funds is tiny. Heck quite a few can't even outperform monkeys trained to throw darts at the stock page of the newspaper...</p>

<p>Past performance is no guarantee of future results...</p>