Hedge Funds Worst First Half Since ’11 on Turmoil

Our Saturday kernel of wisdom this week is the graph below that shows not surprisingly that hedge funds seem to do well mostly only in falling markets.  When things are going well, hedge funds seriously underperform, which makes a certain amount of sense in view of the fact that the only really big secret about these kinds of funds is that they do a lot of short selling, a strategy that can be hugely profitable but that works best in a falling market and can be fraught with calamitous risk otherwise.  This has been especially true in the last six years when there's been so much wild seesawing on practically a daily basis.  When the market goes down triple digits one day, then up again triple the next day, and this happens over and over ... let's just say these are not exactly ideal conditions for successful hedge fund management.