Great Results Depend Upon Superior Hedge Fund Talent

Ten days into the second half of 2018, what are the prospects for a banner year in the hedge fund industry? After all, unemployment is at record lows, optimism for the manufacturing sector is at an all time high, and market volatility has increased, which traditionally provides an edge to hedge funds, yet HFR reports that hedge fund gains for June, 2018 are at -0.46 percent.

Of course, these things, though factual, do not comprehend the broader picture. For example, tariffs and a possible trade war, Theresa May’s bumbling efforts regarding Brexit’s implementation, Russian overtures by Turkey’s President Erdoğan, ongoing talks with North Korea’s Chairman Kim, and the potential of domestic political upheaval foreshadowed by the appointment of a new Supreme Court Justice, mid-term elections and contentious border policies, to name a few. Oh, and let’s not forget the upcoming summit with President Putin of Russia.

What Does This Have to Do with Hedge Funds?

A great deal, actually. Every investment is subject to ancillary events that have the potential to affect the investment’s value. For example, a particularly brutal hurricane season will necessarily exert a negative impact on the value of insurance company stock, which can then impact the performance of hedge funds that have taken positions in insurance company stock.

The point being, investment is inherently risky business. Many liken it to gambling and to a great extent, it is. In fact, it may be riskier than gambling because the odds of success are not as easily calculated as are the odds of drawing a straight flush in a poker game.

Investing has many more variables than does a friendly game of five card stud. This is why the hedge fund industry offers so many opportunities for job seekers from a variety of disciplines.

Hedge fund managers, portfolio managers, chief investment officers and others within the fund that carry any measure of responsibility for investment decisions, benefit from having wide-ranging knowledge, not only of the prospective investment opportunity, but also the ancillary forces that may affect said investment.

What About Hedge Fund Jobs?

Intelligent capital allocators, like those charged with managing pension funds and university endowments, turn to hedge fund managers to increase the value of their holdings, as do high net worth individuals. These are not stupid people, yet, almost daily, one encounters harsh criticisms of the hedge fund industry…in the press, in the media and from our political elites.

The fact is, hedge funds contribute equally, if not more, to people’s well-being than bankers, lawyers, doctors, accountants, and politicians. Those who love investing are driven and intellectually curious. It is this intellectual curiosity that fosters the broad knowledge base essential to successful investment strategies. Hedge funds operate as a meritocracy. Only the best survive.

The takeaway is that regardless of your educational background, if you love investing, there are opportunities in the hedge fund industry despite one’s educational background. One’s love for investing, in concert with an intellectual curiosity that gives one a broad overview of world events and their potential impact on a particular investment, is a sufficient basis for pursuing a career in the hedge fund industry.

A banner year in the hedge fund industry is dependent on bringing these types of individuals into the industry.

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