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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: J_Locke who wrote (37492)	8/1/2005 12:33:11 PM
From: el_gaviero	Read Replies (1) \| Respond to of 110194

J Locke, Very good post on hedge funds as credit enablers. Only point that I would add concerns the fee structure of many of those funds, the so called 2 and 20 (2% or some small percentage of the gross, and 20% or some large percentage of the net profits for the year). With such a structure, hedge fund people have an incentive to take risky positions, and go for big gains. If the trade works, they make 20% of the profit. If the trade fails, other people suffer the big hit. Who wouldn’t take: “heads I win big, tails I don’t lose too much.....”