Hedge Funds Versus Managed Accounts
Nothing ever changes. Yesterday the FBI raided the offices of several Hedge Funds( Diamondback Capital Management and Level Global Investors, and Loch Capital Management in Boston). The raid was part of a broad insider trading investigation in which still more raids are expected. Can you imagine what happens to your investment if you invested with any of these hedge funds?
One word, FROZEN!
I stress all the time the idea that trend following in a managed account enables you to have both liquidity and transparency.
In a managed account the manager does not have access to your money. He/She only has power to buy or sell.
We do not need stories like Madoff to ruin an account. Just read the newspapers. These investors in Diamondback Capital…Level Global and Loch probably will not see any returns in the near future….even possibly the return of their capital might be at stake.
Trend following a basket of commodities, interest rates, currencies, energies…etc is a life time strategy for me. These are all real assets that we use in our every day life. Yes there are hard times and draw downs but with these hard times come the eventual trends in which trend followers have been able to grind out double digit returns for decades. All one has to do is look at Eckhardt or Chesapeake, these commodity trading advisors have ground out mid teen compounded annual rates of returns since the 1980s. Why would any consider any other type of investment. It is your choice..Compound your way to wealth with trend following or buy index funds or illiquid non transparent hedge funds.
Futures trading involves risk. People can and do lose money