TRIMMING THE HEDGES IS FOR THE YARD NOT YOUR INVESTMENTS

Posted On: November 22, 2011 by Ralph Behr, Esq

In today’s market, people in Boca Raton, Miami, Fort Lauderdale and other states alike, are very worried about hedge funds and the distortions they cause in the stock market. Some look like well-known pyramid schemes, some are players, some bring investment savvy and others are pure risk-takers. Why? Because when we hear a story about hedge funds it’s usually about some scam that was run by a hedge fund CEO that succeeded in swindling investors out of lots of money.

While hedge funds trade long some markets and short others, frequently, they can be marginalized and margin murdered when larger forces move. Think about sovereign funds, Greece, Oil pipelines and oil traders. No hedge fund is large enough to put market risk aside and get major returns. With the current securities and stock market ups and downs, bond fears and interest jumps, every investment and every trade matters. The Securities and Exchange Commission may feel the same way, as they voted unanimously in November 2011 to approve final guidelines for the supervising of hedge funds. With this decision and regulatory oversight and involvement will come many questions of hedge funds and investor funds. The costs of more oversight and compliance will work and prove their worth.

Banks in Miami - Dade, Broward and Palm Beach are increasing holding and transactions fees and some are leveraging their own funds in speculative risks through hedge funds. Before you jump and change investment groups, always investigate the stockbroker’s group or the firm environment. Consult a South Florida securities attorney and determine if the risk you are taking in your account is your only exposure. .