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Have You Joined the Bandwagon of Hedge Fund Stocks? (Part 1)

16 October 2007 - Features - Editor

Hedge funds, compared to conventional stocks, attract extra regulatory attention. Their focus is generally short-term compared to stocks of established corporations, and large movements in and out of Exchanges can cause great turbulence. Further, all countries do not have uniform and comprehensive controls on the identities and backgrounds of individual entities behind hedge funds. The field tends to be murky, with periodic allegations that illegal capital is siphoned in to hedge funds.

Not all hedge fund operators are anonymous. Some of the best-known names in the world of stocks have made their fortunes from hedge funds. Professional financial institutions, regardless of their advice to retail customers to stick to stocks and mutual funds, invariably recommend hedge funds for their most privileged customers. Hedge fund owners and operators are known to wield enormous political influences and can sway cornerstone policies for their selfish benefits.

So where do you stand with respect to hedge funds? They are certainly not as well known or understood as conventional trading in stocks, so most small investors keep respectful distances! This is a pity because everyone should have the benefits of hedge funds techniques if not participate directly in their amazing growth and profit records.

How You Can Graduate from Staid Stocks to Top Hedge Funds

What precisely is a hedge fund? The confusion, which surrounds this approach to trading in stocks, is used as a smoke-screen to keep the retail public away. Outlandishly wealthy individuals pay handsome amounts to professionals to operate hedge funds, and entry to this private club is strictly regulated. This is really a pity because small holders of stocks can profitably deploy the techniques used by hedge fund managers, after training, with equal ease and gains.

One of the main trading strategies, which everyone should use with respect to stocks, is to hedge their risks. The future is never certain, and though no single investor can foresee every development in all sectors, there are often sectors and areas about which one has above-average knowledge. Short trading on margins is something, which small investors can copy from hedge fund operations, albeit limited to their specific domains of expertise.

 


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