It's The "Absurd Financial Product Some Rich Person Actually Bought" Contest!
Well look, the market is up again, how (pardon me) UTTERLY FUCKING RETARDED. What this means: another huge plunge is invariably in sight! Because the government achieved this by outlawing short-selling temporarily on all the big stocks you'd want to short, and what the hell are hedge funds supposed to do about that? Gawker tipsters all over financeland are predicting a protracted bloodbath over the next couple months as investors sign up to get their money out of hedge funds. Dozens could go bust. But hey, here is a silver lining: hedge funds are for rich people! (Well, not anymore, now that America is running the world's biggest hedge fund with our tax dollars.) But hedge funds used to be for only the rich, and with your help we can illustrate how rich people are stupid. Inspired by this story about an insane Merrill Lynch investment vehicle called NORMA one expert quoted in the Wall Street Journal called "a tangled hairball of risk", I'm holding the Awful Vodkas I Have Drank of the plutocracy, an "Absurd Financial Product Some Rich Person Actually Bought" contest. I asked one of our tipstering financiers about the most retarded investment vehicle he'd ever seen.
ABSURDISTBANKER: Last year, I built a fund that invested solely in a hedge fund, but it leveraged 2X to do it - so it was a leveraged vehicle to enhance returns on a leveraged equity long/short hedge fund MOE:: oh god a SINGLE hedge fund? ABSURDISTBANKER: Yes MOE: That is fucking nuts. Not even a "fund of funds." A fund of fund. A truly innovative investment strategy. ABSURDISTBANKER: I remember saying to the product team that designed it "People who buy this are insane"
Okay people, here is my attempt at an explanation: at some point everyone with money was all, "Wow. Buying regular stocks and bonds in a company is for suckers obviously, look at that stupid 'Internet' thing and you have to understand like seventy thousand different variables about all these companies. I just want my money to be safe. Putting my money in a hedge fund, now that is what genuine rich people I think are 'smart' do. Because I don't really want to be able to follow what is going on with my money, and the hedge funds won't tell me because I wouldn't understand anyway. But I'll feel good about it because only rich people get to invest in hedge funds, and we wouldn't be rich if we didn't make wise decisions about money." And the hedge funds were all, "Yippee, money, and we get 1% of that upfront, but shit, how are we going to justify our colossal fees now that there are a trillion dollars of the market invested in hedge funds? Oh well, all these people want is for their money to safe so we will just make a few very safe bets infinitely more complicated because that is like 'adding value.' For instance even regular mortal rich people aren't allowed to buy fancy complex derivatives like credit default swaps unless they are very rich and incredibly pushy, and regular people are not allowed to borrow 50 times their net worth so they can make 50 times as much when their safe little trade yields a safe little return. Regular mortal people also can't usually 'short' stocks especially without buying them first so we will do that. You know, regular mortal rich people get a headache just thinking about all this crap, which is good, because if they thought about it long enough they would probably elect to never again pay a bunch of guys a 20% commission so a bunch of guys could borrow 5000% of their net worth to pay a few dozen guys making 1% commissions pooling together and splitting up and insuring and re-insuring thousands of 9% loans because, hello, that is just some Ponzi shit right there, just ask the last stupid rich person who invested in a 'FUND OF FUND.'"