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The Truth about Hedge Funds |
Mark Meyerowitz,Owner,
Meyerowitz Investment Management
Mr. Meyerowitz has been investing since high
school, in the 1970s.
After graduating from Brandeis University in 1977; Mark built up his small family business into a large local retailing company.
From the mid 1990s to early 2003, Mark was a broker with Smith Barney and with Edward Jones; two of the largest invest firms in the nation.
Mark and his family have lived in West Orange, NJ since 1987.
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 Hedge
Funds, one of the fastest growing investment vehicles over
the past few years, are losing their competitive edge. Early
on, hedge funds were small, nimble, and able to buy long or
sell short, in any investment that they liked. But now many
hedge funds are the victim of their own success.
Instead of being lean and mean, many haven't gotten so large,
with so much money, that they wind up "buying the market."
When you too many stocks, you can't beat the market because
you own the market. It also means that you are locked into
a long position. It could be very difficult to unload large
long positions in a hurry, and short the market quickly. In
other words, many hedge funds are no longer capable of hedging.
If a hedge fund can return only market returns, is their any
real reason to own one? After all, they are very expensive,
with steep management fees and performance fees. If a hedge
fund can't beat the market, you may as well just invest in
an index fund or an index exchange traded fund. The results
will be similar, but at far lower expense.
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