Quotes of the Day

Quotes of the Day

Garrett Baldwin

Here’s Your Daily Alternative Market News in Five Quotes

1.   “The chart could never exist in an honest free market.”

Heading into the second week of September, the August heat has shown no sign offering any level of compassion to hedge fund managers. As FinAlternatives noted last week, some of Wall Street’s biggest titans have been humbled by global volatility fueled by China and falling energy costs.

Over the weekend, David Stockman laid the blame on what happened in August at the feet of the Federal Reserve.

But he was also quick to take dead aim at a class of “hedge fund hot shots” that he says has been riding a bubble since 1987. Stockman especially doesn’t mince words for Omega Advisors head Leon Cooperman. Aside from calling him a “insufferable blowhard,” Stockman points out that Cooperman is blaming “last week’s stock market sell-off — and his own poor performance in August — on esoteric but increasingly influential trading strategies pioneered by hedge funds like Bridgewater,” as explained by the Financial Times

Stockman doesn’t pull any punches, equating Wall Street trading to casino gambling, a view shared by many other prominent investors including Edward Thorp during our September issue of Modern Trader (Read Where Gambling Meets Trading, Right Here).

At the top of his common concerns, Stockman explores the rise of sophisticated electronic trading strategies while the Federal Reserve has pumped trillions into the economy. “There have been about 30 identifiable “dips” since the March 2009 low and every one of them have been bought by the casino gamblers,” Stockman says. “And for good reason.”


Looking at this chart, it’s quite apparent that it’s been a good time for big shops with significant liquidity that have ridden the wave of cheap money.

As Stockman notes – “The above chart could never exist in an honest free market.”

2.    “The obsession with an emerging-markets crisis is bordering on the compulsive.”

The Financial Times is worried about hedge funds with significant exposure to emerging markets, though the blame lies on China’s central bank and not the global race to the bottom that has combined massive levels of debt issuance with dramatic rate cuts.

No mention of the Federal Reserve… just a lot of people feeling bad for themselves.

“Troy Gayeski, senior portfolio manager at SkyBridge, the US fund of hedge funds business, says several emerging market hedge fund managers suffered substantial losses of between 3 and 35 percent in August. He plans to continue to avoid such managers as a result.”

The article is worth exploration for two interesting shared opinions.

The first is Gayeski’s broad list of wild cards – outside of the Federal Reserve -- that could fuel volatility in the global markets. They include political risk in Eastern Europe, Russia, China, and Thailand. He also raises concerns about a potential crash landing for China.

Then, there’s the opinion from emerging market fund manager Jan Dehn at Ashmore… which is foreshadowed in the quote above.

3.   “There’s more demand than there is supply.”

Last week, Craig Sebastiano at Benefits Canada offered insights into four different classes of investment, and highlighted some interesting pros and cons over various asset classes.

What stands out are the numbers. In 2014, Canadian pension plans allocated the following amounts to alternative assets:

  • Real estate: $152.2 billion
  • Private equity/venture capital: $119.4 billion
  • Infrastructure: $71.9 billion
  • Hedge funds: $29.4 billion

In addition to the surge of private equity and hedge fund investment north of the border, growth in timberland and farmland investment could be affected by laws regulating such financing as supply levels continue to dwindle around the world.

4.   "...find your adequate art fund and enjoy the additional benefits of investments in art."

As an asset class, artwork isn’t regularly covered by many in the financial media.

This week, the Market Mogul’s offered a “how-to” on art investment, and explained the advantages and disadvantages of this asset class for investors.

“Fear of including art inside the portfolio should be slowly eradicated and motivated by the fact that the root cause of this worry, which is the yet undiscovered and uncertain knowledge on this new asset class, could potential create a competitive advantage towards other investors.”

The piece leaves investors wondering the most important question: How does one go about selecting the best art fund for investment?

FinAlternatives has covered a number of such funds in the past, and hopes to answer the question: Which fund works for you?

5.  "Heard of China’s Fake Rolexes? Now There’s a Fake Goldman Sachs"

The comedy of China’s intellectual property laws has claimed its latest victim: Goldman Sachs.

In a comical article issued by Bloomberg, a company calling itself Goldman Sachs (Shenzhen) Financial Leasing Co. is operating right across the Chinese border from Hong Kong. The firm is using almost the same English and Chinese name as Lloyd Blankfein’s shop. Making it even more of a headache, it appears to be much more than just a financial company engaged in corporate lending.

“Shenzhen’s Goldman Sachs came to light through a letter sent by a U.S. casino workers union to Chinese officials. The International Union of Operating Engineers said it sent a letter to Wang Qishan, head of the Chinese Communist Party’s Central Commission for Discipline Inspection, which is spearheading the biggest anti-corruption crackdown in decades. The letter called on China’s government to investigate Goldman Sachs (Shenzhen), which it said is a financial services company linked to a group of gambling companies controlled by the family of Cheung Chi-tai. Prosecutors in at least two other court cases alleged he has ties to Chinese organized crime gangs, known as triads. Cheung is awaiting trial and his next court appearance is scheduled for September.”

So, Goldman Sachs (Shenzhen) has the look of a large money laundering operation…It’s not like any former Goldman employees have ever been accused of engaging in that sort of behavior…


Be sure to check out today’s top hedge fund and private equity news at FinAlternatives, and visit FuturesMag.com for daily updates on all things trading.

Finally, be sure to read the first issue of MODERN TRADER, which was recently nominated for the prestigious EDDIE award for the BEST ISSUE in the Business and Finance category.



About Garrett Baldwin

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Garrett Baldwin is the Managing Editor of the Alpha Pages and the Features Editor of Modern Trader. He has covered the financial markets since the onset of the RBS collapse in 2007. An author and Baltimore native, he earned a BS in journalism from the Medill School at Northwestern University. He holds an MA in Economic Policy (Security Studies) from The Johns Hopkins University, an MS in Agricultural Economics from Purdue University and will finish an MBA in finance from Indiana University in 2015.

Twitter: @garrettbaldwin, @alphaeditors, @TheAlphaPages

Sound Off: Editorial@alphapages.com


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