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The Financial Crisis in Perspective (Collection)
book

The Financial Crisis in Perspective (Collection)

by Satyajit Das Mark Zandi John Authers
May 2012
Beginner content levelBeginner
1040 pages
27h 16m
English
Pearson
Content preview from The Financial Crisis in Perspective (Collection)

16. Minsky Machines

Gradually problems emerged. Hedge funds did not consistently deliver alpha, and returns were disappointing—in some periods lower than the broader equity market.1 Average returns dropped from 18.3 percent per annum in the 1990s to 7.5 percent in the 2000s.2

Investment genius was always little more than a short memory and a rising market. Edwardian novelist Max Beerbohm was vindicated: “The dullard’s envy of brilliant men is always assuaged by the suspicion that they will come to a bad end.”

But investors still chased yesterday’s returns. The focus now shifted to diversification, using hedge funds to balance the risk of traditional investments. Hedge funds were “a perfectly hedged financial institution [that] loses money in ...

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Publisher Resources

ISBN: 9780133087536