Hedge Funds

You hear the term quite a bit these days, in all sorts of contexts. What is a hedge fund and why are they so special?

Crisis Coverage: The Most Difficult Decision An Investor Must Make

We here at The Long Run Blog are not here to make predictions, give direct advice or be just another source of news.  However, we are here to add a rational, skeptical perspective at what goes on in our world of economics and finance.  I think it is important and hopefully helpful to add perspective to the recent events.

Investors are notorious for making exactly the wrong decision at exactly the wrong time.  Numerous studies of mutual fund, pension and brokerage accounts all confirm the same thing: people get greedy near the top and fear causes them to sell near the bottom.  The stock market is a gauge of human emotion in the short run, not the capital allocation machine it is in the long run.

Behavioral Problems

The word ‘behavior' very often invokes the concept of mis-behavior.  Perhaps it is because we more often hear about a person or organization's poor conduct rather than good conduct?  While this observation may be enlightening, you may by now be snickering ‘what does this have to do with finance?'  Before I answer, let us segue with two questions:  What are the last two digits of your Social Security number?  Next, what is the maximum dollar amount you would pay for an average bottle of wine?