Hedge funds major loss accelerated - Goldman Sachs flagship hedge fund Falls 12 Percent – the real calamity is ahead
Fred Day
Dec. 9, 2006

The hedge funds are bleeding. Some made wrong bets in energy. Some lost their profits in metals. Some lost in currencies and some in treasuries. Overall hedge funds this year has performed worst as nervous funds managers are forced into doing things without hedges to compete.

Goldman Sachs flagship hedge fund Fell 12 Percent. But that is just tip of the iceberg. Unregulated hedge funds have wiped out all the gains that the wealthy investors made from tax cuts. The biggest calamity is actually ahead.

The stock market collapse of 2007 will wipe out thirty percent hedge finds with staggering loses in hundred of billions. The 1987 style fall will be catastrophic as electronic trading systems will be challenged and perhaps collapse.

A fall of 2000 points in a month in Dow will wipe out thousands of hedge funds like Amaranth that trade derivatives on stocks. The trading floors will start refusing accepting orders. The clearing houses will be shaken for ever.

Hedge funds major loss accelerated - Goldman Sachs flagship hedge fund Falls 12 Percent – the real calamity is ahead
Fred Day
A fall of 2000 points in a month in Dow will wipe out thousands of hedge funds like Amaranth that trade derivatives on stocks. The trading floors will start refusing accepting orders. The clearing houses will be shaken for ever.
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US treasuries yield will rise as US economy fights the recession with service jobs – what is the impact on stocks, Euro and Gold?
Marla Guthrie
On Friday job report, the US economy added more than 130,000 jobs. The most lost were in real estate related areas. The most job gains were from business services sector. The trend is clear now.
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Gold shows signs of topping, sticks are tired, oil demand slacks, recession is here but there is a positive side to it
Sam Adelton
It will not be the iPods and Microsoft’s childish software that will dominate. The days of kiddy high tech entrepreneurs are gone. It will be replaced by advanced business intelligence service sectors and engineering innovations.
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Fed will raise rates twice starting March 2007 – bullish for dollar bearish for stocks
Joe Weinman
Next year, there is more than 68% probability in a high confidence level that Fed will raise rates two times starting in March to cope up with inflation. Then they will pause again. That will be very bearish for stocks.
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Economy in the middle of a tug-of-war between lower home prices, increasing stock market and lower gas prices – where does consumer stand?
Marla Guthrie
The consumer will eventually further contract. But that will affect Euro Zone and Asia much more than US economy. The US exports will remain steady but the imports will plummet sending the word economies in economic recession.
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A steady Michigan Consumer Sentiment index with lower retails sales bearish for stocks – 1928-29 parallels
Sunny Peora
The stock market has lost touch with the real world – the grass root economy. Last that happened was in 1928-29. A severe depression followed that in 1929-33. 1928 Christmas was great for the Wall Street.
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A correlation between CRB index, Dow and VIX shows Stock market ready to plunge in January 2007
Peter Oberois
Stock market is guided by profitability. A sharp rise in CRB index means higher raw material cost. That, if significantly higher causes a major problem for corporations.
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