Click here to Login




Hedge Funds Predict Slow but Steady Recovery

Updated on 2013-06-18 by Guest







The American economy is finally starting to show signs of life. This past October, American unemployment fell below 8% for the first time since early 2009. In addition, the housing and stock markets are also surging upward. Will this trend continue? Many top hedge fund managers are cautiously optimistic it will. The general mood of the hedge fund industry is that America is entering a slow but steady recovery. Let’s see what this means for you as an investor.


Hedge Fund Moves

      Hedge funds are slowly moving back into equity investments. In the second quarter of 2012, the top 50 hedge funds increased their total equity exposure by 3%. In addition, 45 of the 50 funds grew their equity portfolios so there is a broad consensus that the stock market is going to continue to grow. The hedge fund industry also invested more money in American and British equities which is a sign it believes the developed World is recovering,

      Hedge funds have a reason to be bullish because 2012 was a solid year for the industry as a whole. Hedge funds saw their assets grow to around $2.6 trillion this past September from a combination of investment gains and new investors. If this trend continues, hedge funds are on track to set a new record for assets under management in 2013.


Cause for Optimism

      The general mood in the hedge fund industry seems to be things won’t get much worse. Ben Bernanke and Mario Draghi have both shown over the past few months that they are willing to prop up the markets with aggressive monetary policy. In addition, the major problems facing the market seem less severe than they did a year ago. While the European Union is still facing a debt crisis, it seems likely to collapse from a problem like Greece leaving the EU. This optimism is coming because Northern Europe is growing steadily and the European Central Bank is better prepared for problems. America’s biggest problem is the looming fiscal cliff at the end of 2012. However, Congress was able to pass a budget in time to solve this problem last year and the hedge fund industry seems confident that it will solve this issue yet again.


Investment Advice

      As a personal investor, there are a few lessons to take away from these hedge fund moves. First of all, it’s a good time to reposition more of your portfolio into the stock market. The market seems to have made it out of the financial crisis of the past few years and should be on track for consistent earnings in the near future. The hedge fund investment strategies also indicate that the odds of a catastrophic “Lehman” sized market collapse are lower today. This means there is less of a benefit for holding U.S. Treasuries as their yields are terrible and they would only be useful if the market totally collapses.

      Lastly, the hedge fund predictions suggest you should not expect huge gains from the stock market going forward. While the market seems on track to keep growing, there are no signs that it will go through the huge gains that occurred during the tech and housing bubbles. There is reason to be cautiously optimistic for your investments going forward, but not much more than that.

      The past few years have been a challenge for both the economy and the stock market. Fortunately, the major players on Wall St. seem to think we have made it through the worst of it. If you trust in the predictions of the hedge fund industry, you can expect a slow but steady recovery going forward.


References:

http://www.factset.com/insight/2012/8/hedgefund_ownership_8.22.12#.UItsKcXMga0

http://allaboutalpha.com/blog/2012/09/25/hedge-funds-and-their-world-slow-recovery-ahead/

http://news.hedgefund.net/default.aspx?story=14278









comments powered by Disqus
Users Blog
QuantShare
Recent Posts QuantShare
Previous Posts

Types of Coupon Swap Futures
Posted 4193 days ago

How to Manage Capital Effectively?
Posted 4193 days ago

Trading With E-Mini Index Futures
Posted 4199 days ago

Impact of Economy on Stock Market
Posted 4210 days ago

A Primer on Day Trading Strategies
Posted 4336 days ago

A Closer Look at Insider Trading
Posted 4385 days ago

Seasonality in the Stock Market
Posted 4414 days ago

An Introduction to Paper Trading
Posted 4419 days ago

A Primer on ETF Trading
Posted 4427 days ago

Is it too late to buy AAPL?
Posted 4427 days ago


More Posts

Back







QuantShare
Product
QuantShare
Features
Create an account
Affiliate Program
Support
Contact Us
Trading Forum
How-to Lessons
Manual
Company
About Us
Privacy
Terms of Use

Copyright © 2024 QuantShare.com
Social Media
Follow us on Facebook
Twitter Follow us on Twitter
Google+
Follow us on Google+
RSS Trading Items



Trading financial instruments, including foreign exchange on margin, carries a high level of risk and is not suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in financial instruments or foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.