Liquidity? Think most Hedge Funds could cover their positions if necessary — especially Short positions? They have created a disaster/train wreck waiting to happen that most are turning a blind-eye too.
Yes.
They have created a disaster/train wreck waiting to happen that most are turning a blind-eye too.
A short covering disaster? You don't know much about markets, do you?
I hope you understand the meaning of what you're talking about. What makes you think hedge funds in general cannot exit any their positions ? Do you even know what a short position is and how would one exit it ? People invested in the hedge funds meet the following characteristcs : high net worth individuals, who are investing the money they can afford to lose. High risk, high gain, potential high loss. Hence the whole 'money you can afford to lose'.
Hedge funds are speculative investments. I'm a portfolio manager for one. We trade equities derivatives in highly concentrated positions. And yes, we can get out any time we like. Not necessarily for a profit, mind you - but never the less, if we weren't present in the market, there would be so much less liquidity in the derivatives market. For every hedge fund you hear about that exploded (-70%), there's another one made the investors 100-120%. We did 32.78% of the portfolio in February when DOW crashed those 416 pts.