Thursday, July 1, 2010
Hedge Fund Liquidation
There are many hedge funds now that are in deep trouble. They are overwhelmingly short euro to so-called hedge their long US stocks position. Both are going against them. We all know that hedge funds use a lot of leverage to achieve outsized returns off such hedges. They are being forced to liquidate as their margin erodes. Remember, it is not retail or mutual funds moving these markets. Its hedge funds. The liquidation is showing up on your screens as the euro is screaming higher while stocks are in hell.
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3 comments:
how does 1000 by august sound now...lol
i covered yesterday though
I find it just maddening that high-quality growth companies with strong balance sheets have been hit much worse than their low-quality brethren. I suppose this could be an effect of fund liquidations.
Funds are loaded up on dividend paying big cap value stocks. They are not in small cap growth.
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