Hedging Your Bets

Is there a global elite out there? You bet there is. Do they operate under different rules than you or me? Sometimes yes, sometimes no.

There’s no question that the rich can get richer. Hedge fund managers George Soros and James Simon earned over $3 billion last year betting against the US housing market. And they can use vehicles like Credit Default Swaps that aren’t available to us mere mortals.

But do the super-rich possess super-powers? Not likely. Studies show that the average hedge fund investor actually earned less than someone who just bought a stock market index fund. Index funds may be boring, but they’re fair, cheap, and widely available. Chances are, a hedge fund’s super-sized returns one year will be offset by losses another. But those don’t always get reported.

The global elite may feel that they’re special, but they put their pants on one leg at a time just like the rest of us. Investment skill is hard to develop. And you’re as likely to find it at a small trust company as at some big investment bank.

Douglas R. Tengdin, CFA
Chief Investment Officer
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By |2014-09-03T18:27:34+00:00April 29th, 2008|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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