So I am wondering how the big hedge funds out there are doing in this environment. I have heard rumors some some of the big names SAC Citadel are getting pounded pretty hard. Im looking for more to read on the subject. All the people that made ridiculous returns while applying leverage are now being slapped in the face. Every major strategy that was working has blown up during this deleveraging. Equity markets have collapsed, risk arb spreads have dramatically widened, commodity markets have collapsed, credit trading is frozen, even the major currency pairs against the dollar have collapsed. Basically every trade that was working has blew up. It seems that the only trade out there that is working is long VOL.
Who has benefited? My guess is the short term traders that trade small enough size to get in and out of positions at a moments notice and anyone who had the courage to fade the dominate strategies of the past few years.
What are everyone thoughts?
Come on, I want someone else' thoughts.
Outside of Paulson and a few others, you've pointed out everything worth having. Quite frankly, the only ones making out are smart day traders (One guy I deal with is up about 80% over the last 9 months, made 120% in July, before calling a play that dropped him 40% in late August on one of his pride and joys). Every single idea, strategy and avenue are shot. Even going long VOL can be risky depending on how you play it out.
One of the accounts I deal with, it's a overlay on the the S&P using uncovered writing, we've had to buy to close on a whole spectrum of S&P Calls - we're talking overlays at just about every possible interval. I'm not even touching the Put side of this, because we have a mixture of written and bought puts, but in general everyone's jumpy. No one wants to make serious calls, and when they do, it's in positions where everything is moving like lightning, or it's in thinly traded options (like one of the guys I deal with has been trading in). The guys making the money, or losing it the least, are the guys that actively follow a small collection of stocks (say 15 or so) and actively trade them and limit their exposure to downside by cutting losses quickly.
Honestly, I'm just trying to figure out when we hit 10,000. I just think that's going to be the level that determines what happens next (either a massive spiral downwards or things start to level out) and then we go from there.
Big funds are struggling, not nimble enough.
http://dealbreaker.com/2008/10/sac-taking-a-breather.php
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