Florida - West Coast United States
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June 10, 2010
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Suppose you just won 120 million dollars playing PowerBall.
Lots of people are trying to reach you, including money management professionals. You want to be smart and "do the right thing" with your money so as not to squander it all. So you decide that you that want to become an investor, you want to keep an open mind, so you tell your lawyer that you'll agree to talk to various investment professionals.
Your lawyer calls and says that a Hedge Fund manager contacted her and asked her if you were interested in setting up a meeting to discuss investing in his fund. Would you/should you agree to the meeting?
I think the larger question is; Would a hedge fund manager be willing to accept your money? That's because he has to vet you to confirm that you truly are what he calls an "accredited invester". (By law he must confirm that you have at least 1 million dollars to invest that does not include your primary residence)
The U.S. Securities and Exchange Commission says that if you do become an accredited investor then they think you have enough money and are saavy enough about investing to invest in a very risky vehicle like a hedge fund.
Do you have the guts to invest in a hedge fund? Could be very lucrative thing to do. G5
Missouri United States
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August 9, 2020
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Why would you give your money to a total stranger aka a "money manager"... Open an account at a brokerage and buy some stox that give the stock holders a decent return on investment... Think dividends... There are lots of ways to invest in the markets... Hedge with metals...
Florida - West Coast United States
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Quote: Originally posted by ddude003 on Aug 14, 2022
Why would you give your money to a total stranger aka a "money manager"... Open an account at a brokerage and buy some stox that give the stock holders a decent return on investment... Think dividends... There are lots of ways to invest in the markets... Hedge with metals...
Opening an account with a brokerage firm doesn't guarantee anybody anything.
Horror stories abound about people investing with a crooked stock broker that was employed at a big name brokerage firm. All anybody has to do is watch a few episodes of CNBC's American Greed to see how big brokerage houses have employed scam artists that preyed on unsuspecting investors. Think Bernie Madoff. G5
Florida - West Coast United States
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Quote: Originally posted by GiveFive on Aug 14, 2022
Suppose you just won 120 million dollars playing PowerBall.
Lots of people are trying to reach you, including money management professionals. You want to be smart and "do the right thing" with your money so as not to squander it all. So you decide that you that want to become an investor, you want to keep an open mind, so you tell your lawyer that you'll agree to talk to various investment professionals.
Your lawyer calls and says that a Hedge Fund manager contacted her and asked her if you were interested in setting up a meeting to discuss investing in his fund. Would you/should you agree to the meeting?
I think the larger question is; Would a hedge fund manager be willing to accept your money? That's because he has to vet you to confirm that you truly are what he calls an "accredited invester". (By law he must confirm that you have at least 1 million dollars to invest that does not include your primary residence)
The U.S. Securities and Exchange Commission says that if you do become an accredited investor then they think you have enough money and are saavy enough about investing to invest in a very risky vehicle like a hedge fund.
Do you have the guts to invest in a hedge fund? Could be very lucrative thing to do. G5
How uncool is this? Replying to my own post....
The real question is this; Should a hedge fund manager accept money from an individual who he knows probably does not totally understand how risky investing in a hedge fund is, yet still the individual is qualified to invest? My guess is the hedge fund would take the money.
Let's say the big winner was an average middle class person, had a mortgage, makes $60,000 a year, married with two kids, saves for their retirement with a 401k etc. Because he didn't have enough money to get into a hedge fund in the first place, he probably has heard the term "hedge fund" but doesn't know anything about them. (That's not unusual, in fact it's normal/typical. Most people don't know exactly what a hedge fund is or how they operate)
The most successful hedge fund firm of all time is Bridgewater Associates. Bridgewater employs people whose sole job it is to "raise capital". (raise money) In fact, the fund has to have that raised capital or eventually it will fail. It's possible they could get into a situation where they had more money going out than coming in, and that's the reason some have spectacularly crashed and burned. (That can't happen to Bridgewater... they're too big to fail) The guy who raises capital knows he has to get money into the fund and there's big pressure on him/her to get that capital.
Just how ethical is it for a hedge fund to accept money from somebody that they full well know doesn't understand what's going on? Sure, the fund might invest the guy's money someplace where the guy gets 5 times his money back. But what if they lose the guy's money? A lot of hedge funds have a minimum investment requirement of one million dollars....
Everybody wants to win the jackpot, me included. But that big money can very quickly and easily get a financially naive person in a world of trouble. Few people realize that fact. They just see the dollar signs. The above is just one of the many reasons big winners will need a lot of professional financial help. And yes the fees money pro's collect suck, but you'll be a lot better off paying them. G5
Missouri United States
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August 9, 2020
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A hedge fund is the last place I would "invest" my funds... What you have said above is one of many reasons not to get involved with a hedge fund... I would just steer clear of the "orthodox financial" community where fund managers get fees regardless of performance... I does not take rocket science to learn about the markets and make your own decisions on how to invest... If this is even the direction a lottery jackpot winner wants to go... And there are plenty of brokerage houses where you can make you own decisions and place your own trades... There are plenty of investment vehicles available without having to think of hedge funds and trading the markets...
Florida - West Coast United States
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June 10, 2010
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I couldn't agree more with you if I had to. Everything you wrote is true. The downside to brokerage houses where you invest on your own is they're probably discount brokers that don't offer any advice to clients anyway. (like e-Trade).
There isn't anything wrong with investing on your own. But then many have tried it and failed miserably as have professional money managers. Nobody has a crystal ball. My only point is that people who have little to no financial knowledge are probably going to better off using a skilled money manager. And that's if you find one that's honest. Most are honest but there are definitely thieves out there that are licking their chops trying to find someone that they will have no problem stealing their money. G5
Texas United States
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May 2, 2004
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Your lawyer calls and says that a Hedge Fund manager contacted her and asked her if you were interested in setting up a meeting to discuss investing in his fund. Would you/should you agree to the meeting?
Thieves, scammers, pirates and manipulative money managers is the reason they have to contact my lawyer to speak with me. I expect the lawyer to do due diligence and sus out the people I don't need in my bank account.
I think the larger question is; Would a hedge fund manager be willing to accept your money? That's because he has to vet you to confirm that you truly are what he calls an "accredited invester". (By law he must confirm that you have at least 1 million dollars to invest that does not include your primary residence)
Anyone who contacts my lawyer already knows what I have, or they wouldn't make contact asking to speak with me.
G
I'm probably here unless I'm not.
Dreaming would be a perfectly useless function if it's only purpose was to entertain.
