One of the most powerful US hedge fund managers believes that the industry is in “first innings of a washout” after a string of disastrous market calls inflicted steep losses on many funds…

    The first quarter was “one of the most catastrophic periods of hedge fund performance that we can remember since the inception of this fund,” in December 1996, Mr Loeb said. “There is no doubt that we are in the first innings of a washout in hedge funds and certain strategies.”



The money quote:

    “Why do people believe it?” asked David Maris, an analyst at Wells Fargo. “They follow Valeant because they want to follow it. They want to believe they have found a new way to make money in pharmaceuticals without investing in new drugs — it sounds like a magic money box.”

Someday, financial people will realize that they can't actually print vast amounts of money, but a lot of innocent bystanders (e.g. CalPERS investors) are going to bleed until that day comes.

posted by kleinbl00: 993 days ago