Chelsea Clinton's Graduation from Stanford, 1997
HAPPY (BELATED) BIRTHDAY CHELSEA
In case you already didn’t know, yesterday was Chelsea Clinton’s 27th birthday.
Between coughing fits and a low grade fever, I just didn’t have it in me yesterday to salute the former first daughter now working in an “undisclosed capacity” at the $12 billion hedge fund manager, New York based Avenue Capital Group, whose founder has contributed to many Democratic Party candidates. As it was, I hardly made it through the Academy Awards (thank God for Ellen) with the flu. It hasn’t DEPARTED yet, but the good news is that my favorite movie of the year took away a few Oscars. Back to Chelsea. And hedge funds.
http://www.msnbc.msn.com/id/15549672/
Chelsea seems nice. I bumped into her a few years ago at the Lancome counter at Nordstrom shortly before her graduation from Stanford (Palo Alto, CA.) She was with a girlfriend and was very casual and relaxed in the role of first daughter for everyone to see in the bucolic shopping center/campus surroundings. This brief encounter consisted of little more than an exchange of looks that signalled "hiya, Oh hey! You’re Chelsea, you look like your pictures” with her acknowledgement “You got it, have a great day” exchange of smiles as she completed her transaction for whatever it was that she hauled off with in her bag.
Anyway, I especially like the above photo of the happy, former first family.
Between coughing fits and a low grade fever, I just didn’t have it in me yesterday to salute the former first daughter now working in an “undisclosed capacity” at the $12 billion hedge fund manager, New York based Avenue Capital Group, whose founder has contributed to many Democratic Party candidates. As it was, I hardly made it through the Academy Awards (thank God for Ellen) with the flu. It hasn’t DEPARTED yet, but the good news is that my favorite movie of the year took away a few Oscars. Back to Chelsea. And hedge funds.
http://www.msnbc.msn.com/id/15549672/
Chelsea seems nice. I bumped into her a few years ago at the Lancome counter at Nordstrom shortly before her graduation from Stanford (Palo Alto, CA.) She was with a girlfriend and was very casual and relaxed in the role of first daughter for everyone to see in the bucolic shopping center/campus surroundings. This brief encounter consisted of little more than an exchange of looks that signalled "hiya, Oh hey! You’re Chelsea, you look like your pictures” with her acknowledgement “You got it, have a great day” exchange of smiles as she completed her transaction for whatever it was that she hauled off with in her bag.
Anyway, I especially like the above photo of the happy, former first family.
The Dow ALSO hit the skids yesterday, which brings me back to Chelsea and hedge funds. After Chelsea's stint at McKinsey (Everyone I know who worked for McKinsey was recruited straight out of graduate school and stuck around less than three years. Just an aside…), she is now doing "something" with hedge funds. So the Dow picked up today and everyone will forget about its temporary collapse yesterday, but is this a classic bull market for bullshit? Hedge funds are a form of "rewealth" distribution pools, exchanged between people wealthy enough to demonstrate they need no more than market returns and fund managers and specific Wall St. firms that execute their numerous orders.
Under normal circumstances, the stock market often lags behind (as opposed to leading) the economy. When the market finished its crash in 2002, the economy had already long since hit is bottom. As of 2003, the Dow measured in constant currency terms, has done very little. That's one reason why a great deal of money has been funneled into Hedge Funds - because the straight up indexes haven't been keeping up with an all important indicator - corporate profits -- which have been going up much faster than the Dow, or certainly any part of the economy other than real estate which now appears to be leveling off.
But something that should give everyone pause is the sector that has not fully participated in this rally -- the technology sector. Take out technology, and the S&P would be up, not down from its peak. That's not great news, because it was tech that drove productivity gains during the bubble.
Since hedge funds are kick starting the financing of some of the biggest venture-capital deals, it also reflects the need for start ups to raise larger amounts of cash to float them until an initial public offering or, increasingly commonplace, the rolling up into a larger, public portfolio company.
Under normal circumstances, the stock market often lags behind (as opposed to leading) the economy. When the market finished its crash in 2002, the economy had already long since hit is bottom. As of 2003, the Dow measured in constant currency terms, has done very little. That's one reason why a great deal of money has been funneled into Hedge Funds - because the straight up indexes haven't been keeping up with an all important indicator - corporate profits -- which have been going up much faster than the Dow, or certainly any part of the economy other than real estate which now appears to be leveling off.
But something that should give everyone pause is the sector that has not fully participated in this rally -- the technology sector. Take out technology, and the S&P would be up, not down from its peak. That's not great news, because it was tech that drove productivity gains during the bubble.
Since hedge funds are kick starting the financing of some of the biggest venture-capital deals, it also reflects the need for start ups to raise larger amounts of cash to float them until an initial public offering or, increasingly commonplace, the rolling up into a larger, public portfolio company.
In a climate where technology start ups are seeing less opportunity for IPO’s as opposed to acquisitions and because hedge funds are loosely regulated investment vehicles, they often pony up more cash for stakes in start-ups than venture capitalists are willing to offer.
The United States is now so far into the hole that even the Chinese and the Saudis are sacking their lust for the once mighty dollar.
But hedge funds are not in fact “part of the market”-- they ARE the market. They manage profits through the use of heavy trading, localized trading, and publicity. Emphasis on publicity, capital “P”.
Hedge Funds create profit by taking large long positions, short it through the options market, and then drive the stocks down through massive sell offs in the equity market. That type of trading doesn’t take a genius, but it does take somebody with enough capital/leverage to simply manage a market in this way. Many times the sell off is generated through the use of publicity against the company by the aggressive fund.
In a word: There is little “chance or risk” when you have stacked the deck.
-2Truthy
5 comments:
Since she joined ACG, she's been hanging out with princes from the Emirates. FYI her job is to sniff out distressed securities, also referred to as vulture capital / debt. The vc link to hedge funds hinges on private market information exchanges that would drive up points on their public holdings. If you are leveraged on $12B at 2-1, that's nothing to blink at.
Happy birthday.
I think you'll find that you've misused the term "rewealth". I just read the book, and it has to do with creating wealth in a way that restores, redevelops, replenishes, and revitalizes the world. That's hardly what hedge funds do...
anon, you say
"I just read the book, and it has to do with creating wealth in a way that restores, redevelops, replenishes, and revitalizes the world."
Sources?
"Hedge Funds create profit by taking large long positions, short it through the options market, and then drive the stocks down through massive sell offs in the equity market. That type of trading doesn’t take a genius, but it does take somebody with enough capital/leverage to simply manage a market in this way. Many times the sell off is generated through the use of publicity against the company by the aggressive fund."
http://dealbook.blogs.nytimes.com/2006/11/27/hedge-fund-fever/
Here is the link.
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