24/7 Wall St – Investors almost always worry about a stock market crash, but when headwinds start to look stronger than the positive forces, they really start to worry that the rug can get yanked right out from under them. Perhaps what retail investors should do is try to learn what the professionals do with their clients’ money and their own money. Very few fund managers sell out of stocks entirely. After all, cash never rallies, and it is widely known that bull markets always seem to crawl a wall of worry.
24/7 Wall St. is identifying and discussing several strategies that investment managers, hedge funds and market gurus use to keep their toes in the stock market but manage to avoid major risk of a stock market crash. Performance and assets under management are everything to the hedge funds and institutional money managers, because their asset base and their performance are how they get paid. Now that the 2% management fee and 20% performance fee structure has been changing, these managers have to guard against too much risk leading to too high of losses.