Largest Hedge Funds

mark tuminello top fiveAlthough all hedge funds put together estimate about 3 trillion dollars in assets, a large portion of that money comes from the top five hedge funds.  The biggest hedge funds manage around 1.6 trillion dollars, more than half of the number of assets that every hedge fund put together makes.  The following is a list of the largest hedge funds at the moment:

Number one is JPMorgan Chase through both Highbridge Capital Management and JPMorgan Chase Asset Management.  Although this hedge fund has lost around 9 billion dollars previous years due to funding, the company still makes over 45 billion dollars when it comes to assets.  JPMorgan Chase invests in almost anything – from real estate to arbitrage products.  One of their key mechanisms for gaining such an abundant income is hiring employees who each have different means of investment philosophies and managing styles.

The next two hedge funds with the highest incomes are Farallon Capital Management and Bridgewater Associates.  Though both of these hedge funds are based out of separate coastlines, each of these firms acquire roughly 36 billion dollars in assets.  San Francisco’s Farallon is a top choice for extremely wealthy individuals.  This hedge fund hosts various events which aim to capitalize on investment opportunities, particularly within the housing market.  Connecticut’s Bridgewater Association is exceptionally talented with thriving in emerging markets, currency, commodities, bonds, and equity investments.

Number three on this list of the largest hedge funds is New York’s Renaissance Technologies, who earns 35 billion dollars under their strategic management.  The Medallion Fund is Renaissance Technologies most well-known investment; it averages around 35% in annual returns, charges investors a 5% management fee, and has a 44% performance fee.  This hedge fund uses a global macro strategy when it comes to employment-making decisions, hiring only the top mathematically and scientifically driven individuals, as opposed to more financially consumed ones.

Also out of New York, Och-Ziff Capital Management is the fourth largest hedge fund, gaining around 33 billion dollars in assets.  This hedge fund invests most predominantly in real estate, private equity, and equity restructuring – mostly in foreign-based markets.  Although Och-Ziff Capital Management has experienced a rough time in the 2008 market, they are still rated in the top ranking hedge funds.

Lastly, D.E. Shaw is ranked number five on this list, earning around 32 billion dollars.  This other New York based hedge fund is an expert at buying out companies in trouble while simultaneously developing and financing newer ones.  D.E. Shaw takes pride in their extremely talented math-oriented staff, who use their computer skills to find most all of their market opportunities.

These top six hedge funds prove that online investment locating and hiring intelligent, fast paced employees are key to succeeding in an incredibly competitive market.

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Evolution of Hedge Funds : An Overview

mark tuminello hedge fund evolutionHedge funds, regardless of the name, are largely defined by their structural nature of incorporating various investment strategies and risk-management approaches, instead of their “hedging” characteristics. Hedge funds are essentially private partnerships providing the highest flexibility in establishing a portfolio. They allow provisions to make concentrated investments, use derivatives or leverage, allow investments in various markets and can be both long and short sides of the market.

In the past decade, the hedge fund industry has grown astoundingly from about 300 funds in 1990 to more than 10,000 in today’s times. It is estimated that these funds manage over $1.4 trillion in assets, onshore and offshore has is now increasingly monitored by the markets and the press. Alfred W Jones, in 1949, was the founder of the idea of hedge funds. He did so as he ‘hedged’ the market risk by short-selling and through effective use of leverage and this created led a steady trend of hedge funds outperforming mutual funds of that time.

It wasn’t until the 1960s, however, that hedge funds truly started to catch people’s eye, especially the eyes Pioneers like Warren Buffett and George Soros, who took a keen interest in Jones’ unique strategy and this led to the creation of over 130 hedge funds in the subsequent years. The attractive tendency of hedge funds, like real estate or private equity, to provide returns unlike those of traditional investments, increasingly attracted large number of institutional, and even individual investors.

In the 60s and 70s, hedge fund managers hedged their portfolios in the true sense of the word to make money on both long and short positions and in a few years, managed to make impressive profits for themselves, while delivering huge returns. Unfortunately, eventually, there were many investment professionals who saw hedge fund management as a way to make quick easy money, by bypassing the limiting infrastructure of the mutual fund industry.
Hedge fund managers today do not quite ‘hedge’ funds as much and have come a long way from Alfred Jones’ simple leverage and short-selling strategy. Many hedge funds, nowadays, take a more speculative approach and venture to achieve absolute returns.

The core investment strategy of modern hedge fund is not hedging or market risk reduction, but rather to use the right kind of leverage to optimize market’s returns in a type of inflexible bet on market swings and many such funds have earned cash-like returns with outrageous fees. These questionable strategies, says Lee Levy in his article about Hedge fund worthiness, have earned a negative reputation for the hedge fund industry in today’s market but in the end the process is all about some managers developing new ways to critically analyze the market, while the rest stay with traditional reliable methods.

The 2008 catastrophe of markets crashes all over the world led to some of the most disastrous times in the hedge fund industry. Some of the brightest and most successful managers has losses of 30 percent or more and there was a fall in the number of assets under management, since many investors switched to cash investments and even treasury bills. However, the beauty of the diverse strategies used used by hedge fund managers meant that some had implemented strategies that actually tended to have greater returns in a more erratic market and they made money for the investors, inspite of the ill-fated financial crisis. In early 2009, the industry recuperated impressively and since then has risen steadily in popularity among many investors.

Only time will tell how this regularly misunderstood, occasionally mistrusted, often rightly so, continually evolving industry will fare in the future years but it’s propensity to adjust to shifting markets points towards a rather bright one.

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Choosing the Right School (for teachers)

mark tuminello choosing a schoolYou’ve met teachers who love their job. They don’t mind the challenges of student-wrangling, of grading, of ever-changing job requirements. These teachers also appreciate their schedule, complete with plenty of vacation time, and don’t mind picking up other work for the longer periods of break.

But you’ve also met teachers who didn’t enjoy their work. Many of them are probably ex-teachers. They seem perpetually unhappy with their professional life. Unruly students, unrealistic expectations, and political clashes prevent them from ever feeling at ease in their classrooms.

The benefits and challenges of a teaching job varies a lot from institution to institution, and it’s important that you take time to make a decision that will pay off for you (not just financially) in the long-run. The school where you work will also help to shape you as a teacher, which makes the decision of where to work even more important.

It can be difficult to wade through the shiny marketing language you’ll find about on school websites, but it’s the best place to start learning about a school. And after all, having an understanding of the school is paramount to figuring out whether it will be a good fit. Look beyond the language designed to attract parents. Does it seem that the school has a human element? Is the site presenting modern and professional information?

Next stop is the Department of Education, where information is listed for many schools. Here you might be able to find data like performance, absence rates, etc. Just remember that this data applies to your job indirectly. For instance, schools that work with less-than-stellar performing students might have a group of teachers working very hard, which could be an inspiration to you.

Visiting the school in person is the big moment. It’s important not to get caught up on the little things, like the layout of classrooms and hallways or particular interactions between students and teachers. Don’t worry about that kind of stuff…you’d adapt to that quickly.

Instead, look at the general atmosphere, including the way you’re greeted. Are people rushed and stressed? Are there a lot of new teachers, indicating high turnover? Are students generally polite to one another in the hallways? Do they seem eager to get to class? What’s the general feeling of the social environment between teachers?

More than anything, trust your instincts. After you’ve asked yourself plenty of hard questions, you may already know whether or not you would thrive at a particular school.

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Eurozone Struggles

Mark Tuminello eurozoneThe economic outlook for the Eurozone isn’t pretty. Growth isn’t growing, deflation looms, and economists once on the fence about the future of the region are now deeming the initiative as a failure. That said, there are still a lot of economists and politicians keeping their fingers crossed that the Eurozone could still become an optimal currency area.

The euro was born during a major transition of global currency. When the IMF was first established, they established exchange rates more or less based off the value of the US dollar. US currency was in turn based on gold reserves, with direct convertibility. Nixon changed all this when he led the charge for the US to abandon the gold standard. Now world currencies free-floated against one another.

Part of the hope of the euro was that it would boost the economies of Europe by expanding their local market past each nation’s borders. Costs would go down, and trade and information would flow more freely. Sure, they were giving up monetary independence, but it felt like a good trade back then. After all, the dollar was doing so well back then that the currencies of Europe just couldn’t keep up.

Now, with some countries struggling much more than others, the lack of independent financial instruments have made it difficult to respond to negative economic shocks. Recovery from the tumult of the last decade hasn’t been smooth.

The fact of the matter is that the eurozone is now part of the global community. It isn’t likely to be disassembled, and so we need to learn how to optimize it to meet new challenges. It seems that countries that are struggling right now, like Greece, ought to develop some kind of financial instruments to prevent a continual state of crisis. Countries in better economic shape, like Germany, need to encourage this bit of independence, as they will also face the consequences if something should go terribly awry.

And then, the next step is probably for the economies of Europe to consolidate politically. The only way a union thrives is for it to be truly unified. Otherwise the citizens of Europe may be stuck with an economic environment whose benefits don’t outweigh the costs.

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Paul Krugman’s Blog

Mark Tuminello’s latest blog post –

Mark Tuminello Paul KrugmanIf you’re not a reader of Paul Krugman’s blog on the New York Times, I highly recommend you take a look at it. Krugman is a celebrated and awarded economist whose specialties include international economics and currencies. Outside of his areas of expertise, he’s just a very sharp guy with lots of valuable insight on a variety of topics. His blog is a terrific mix of economic theory, political analysis, and fun – yes, he even posts music videos occasionally. His recent posts on the recovering economies of the western world and income inequality contain perhaps the most rational discussion points on each topic. However you subscribe to blogs, check out Krugman’s for a few weeks. I think you’ll find a lot there!

from Mark Tuminello