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Strategies & Market Trends : Position Trading Forum -- Ignore unavailable to you. Want to Upgrade?

To: Devil's Advocate who wrote (2558)	9/29/1998 9:56:00 AM
From: Jay Ray	Read Replies (1) \| Respond to of 7247

>Excuse my naive question but what is an hedge fund? Its a fund that makes money through arbitrage, or exploiting small differences in prices of securities across various markets. They use derivatives, which "derive" their value from underlying securities. Hedge funds are highly leveraged and thus vulnerable to sudden market downturns. Long Term Capital made a few bad bets and lost $2.5 billion in one month (try explaining that one to your spouse!). Hope this helps. I have no direct experience with this so others here can probably give you a better explanation of the technical end. Jay Ray