Comments on: Who are hedge funds dating? http://blogs.reuters.com/macroscope/2011/11/12/who-are-hedge-funds-dating/ Shining a light on the dismal science Wed, 16 Nov 2016 01:39:19 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: Acetracy http://blogs.reuters.com/macroscope/2011/11/12/who-are-hedge-funds-dating/comment-page-1/#comment-2934 Tue, 15 Nov 2011 12:44:55 +0000 http://blogs.reuters.com/macroscope/?p=6106#comment-2934 The major factors that make hedge funds so dangerous are:

1) Leverage. IN some cases as in the carry trade, the funds are leveraged up to 100 to1.

2) Their time horizon is nano seconds rather than years which creates a speculative environment throughout the financial markets

3) There is no risk for failure since they don’t trade their own money, get rewarded hugely for profitable trades but have no downside risk if they lose money.

4) It is the banks’ depositors that are providing the funds for hedge funds to leverage, thus putting at risk the whole financial system. Remember LTC?

There should be no unregulated trading at all in the financial markets and margin rules should be strictly applied where there is at least an 80% collateral requirement for any trade, including futures and options.

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