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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: eWhartHog who wrote (68946)	10/11/1999 3:53:00 PM
From: Robert	Respond to of 132070

LOL!

To: eWhartHog who wrote (68946)	10/11/1999 5:29:00 PM
From: Skeeter Bug	Respond to of 132070

>>He moved on to Long-Term Capital Management in the 1990s, and given the fate of that firm would probably agree that switching from 90/10 to 0.01/99.99 was a big mistake. <g><< john, why? they all got their bonuses when all was said and done -ng-

To: eWhartHog who wrote (68946)	10/11/1999 5:35:00 PM
From: Knighty Tin	Respond to of 132070

John, I am no fan of Merton or Scholes, but it wasn't their fault that their 90/10 fund was a flop. There were about 4 of them in the 70s and early 80s. Oppenheimer and Keystone managed the two largest ones. However, they were dead on arrival due to an archaic IRS rule called the "Short Short Rule." Not to get into too much legal crapola, fund managers were very restricted from taking gains on positions held less than 90 days in the mutual fund legal critter. The Short Short Rule hurt income funds (For example, it cost my Government Options Income Fund 7% in 1985 and 5% in 1986, which was big money on a $10 billion fund) and cap gains funds, but it was totally deadly for something like a 90/10 fund. If you have an 800% winner in an option, and have to hold it for 90 days, the odds are that the market will turn against you in that time. Total nonsense. In 1980 I was offered a position as a manager of a 90/10 fund and I told the fund co. "no way, Jose," thanks to The Short Short Rule. Now, after decades of lobbying, a heck of a lot of it, in fact, too much of it, by me, the rule has been eliminated. Now, mutual fund cos. should be jumping all over 90/10 funds, but they aren't smart enough to know that. <g> They will remember after the crash. BTW, Sholes and Merton would never have been able to raise that much money for a 90/10 portfolio at LTCM, which isn't a mutual fund. The brain dead big players who buy hedge funds like the low return/high risk trades, not the high return/low risk trades. Don't ask me why, but it's true.